Good or bad economy? ‘Gifts’ divide Gujarat politicians and economists


The BJP government of Gujarat has granted for the current financial year an exemption from business tax to salaried persons earning up to Rs 12,000 per month. State coffers will lose Rs 108 crore per year. It gave farmers interest relief of Rs 1,250 crore. The government will also offer financial support of Rs 40,000 to students to buy laptops for online education.

Will these ads fall under the category of gifts or social assistance schemes, ask political opponents.

Not a single Aam Aadmi Party pledge is free, each one is based on econometrics, statistics and logic, and will have little negative impact on state coffers, says Kailash Gadhvi, party treasurer and certified accountant.

Gadhvi explained the calculations behind the 600 free power units. “There are 1.65 crore domestic consumers, of which 35-36 lakh are private enterprise consumers. rupees to the Treasury.”

The AAP planned to meet these losses. “The transmission and distribution (T&D) losses of private electric companies are 8-10%, while the T&D losses of public companies are between 18-20%, if reduced to 10%, they compensate for the loss of free energy.”

Gadhvi cites Section 39(A) of the Constitution which requires states to provide free legal aid to citizens, and Section 45 which requires the state to provide free and compulsory education to all children up to the age of 14. When the Constitution required states to provide these free services for the welfare of the people, how can that be anti-development.

Economist Indira Hirve argues that in the name of financial burden or economic trouble, the state cannot run away from social welfare.

It strongly advocates that elementary education and primary health care be provided free of charge, secondary and higher education and special medical services be provided at affordable prices.

According to her, “BJP or NDA government has no right to talk about gifts, NDA waived bad debts of Rs 10 lakh crore from industrial houses and gave grants and incentives of Rs 5 lakh crore.”

No one is asking or advocating for subsidies or financial aid for the rich, but the state has a duty to the poor and should provide social services like education and health free of charge, says Gagan Sahu, associate professor of economics at the Center for Social Studies, Surah.

Sahu is of the opinion that social services like these two cannot be left to the private sector, it will create inequalities in society. It is the duty of the state to treat all citizens equally and to ensure that everyone has the same opportunities.

Disagreeing with them, Jigar Patel, an associate professor (economics) at Sardar Patel University, believes the government should end subsidies and offer free services.

According to him, if this continues, it will put a financial burden on the rest of society, commerce and industry.

The more grants or free services you provide, the more government spending increases; to meet the expenses, the State will have to levy more taxes on individuals, trade and industries. This will prove counterproductive because in the face of increased spending, if revenue does not increase, the state will have to reduce development spending, so in the long run, subsidies and free services are anti-development.



(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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