[Answered] “Subsidies as a tool for short term political gains, not only put extra burden on public exchequer but is also an undemocratic mean to influence peoples.” Comment.

Subsidies like offering free power not only led to extra burden on public exchequer, it has also been undemocratic mean in an attempt to gain public support. Subsidies like this not only shake up the power sector and shatters the hopes of a shift to market-driven policies but also act as political gimmick for political parties.

Subsidies as a political tool and economic burden:

1. Subsidy is used by political parties to gain votes and act as populist measure to attract people’s support.
2. It is undemocratic in a way that it influence the free and rational mind of people leading to influence in voting pattern.
3. Subsidy is often used as a political gimmick near elections in order to lure people and gain their votes.
4. Subsidy encourage inefficiency by relying more in the subsidy money that offered by the government.
5. People still receive the subsidy that offered by the government even though they gain not much profits through it.
6. Subsidy put extra burden on state’s purse and generally lead to fiscal deficit.
7. Subsidy act as a tool of diversion from real issues, and suppress the real issues in the name of freebies.
8. Subsidy will eventually raise commercial and industrial costs, causing the final products to lose their competitiveness in the international market.
9. Subsidies are seen as benefits to help poor and trouble family farmers. Instead, they harm them by excluding them from most subsidies, financing the consolidation of family farms, and increasing land values to levels that prevent young people from entering farming.
10. Subsidy sometimes is difficult to decide on who may receive a subsidy and the government has poor information about the service and how much to subsidies.

Although subsidies are important and act as immediate relief but it is more a sort of short term measure and sometime a political gimmick. Subsidy generally do not reach the poor and needy and is exploited by rich and corrupt. A more sustainable solution is needed in place of subsidies that act as a long term solution. A universal basic income can be explored for poorest of poor.