Are direct cash subsidies better?

By: Udit Misra, NS Ramnath/Forbes India

Giving cash directly to the people was always a better idea than the convoluted subsidy system. But its time has come just now

After dithering on the matter for more than a decade, the government has announced that it will provide direct cash subsidy for fertiliser, kerosene and LPG. It will start by running a pilot based on the recommendations of a task force formed for this purpose, and headed by Nandan Nilekani. It is due to submit its report by June this year. The move is significant since many believe that once implemented, it will pave the way for similar direct cash transfers by the government in subsidies like food and education.

India spends about Rs 160,000 crore every year or roughly two percent of the country