{"id":202097,"date":"2022-08-26T18:56:47","date_gmt":"2022-08-26T13:26:47","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=202097"},"modified":"2022-08-26T18:56:47","modified_gmt":"2022-08-26T13:26:47","slug":"freebies-a-judicial-lead-and-a-multi-layered-issue","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/freebies-a-judicial-lead-and-a-multi-layered-issue\/","title":{"rendered":"\u2018Freebies\u2019, a judicial lead and a multi-layered issue"},"content":{"rendered":"\n

Source<\/strong>: The post is based on the article \u201cFreebies, a judicial lead and multi-layered issue<\/strong>\u201d published in \u201cThe Hindu<\/strong>\u201d on 26th<\/sup> August 2022<\/strong>.<\/p>\n

Syllabus: <\/strong>GS 3 The Union Budgeting<\/p>\n

Relevance: <\/strong>Freebies; Subsidies etc.<\/p>\n

News<\/strong>: In the recent, the Prime Minister commented upon the \u201cfreebies<\/strong>\u201d handed out by the state governments. The Supreme Court of India also commented that there has to be a distinction between expenditure made on social welfare schemes <\/strong>and \u201cirrational freebies\u201d<\/strong> offered to voters during elections. This has reignited the debate on the economic rationale for granting subsidies.<\/strong><\/p>\n

What is the definition of \u201csubsidies\u201d?<\/strong><\/h5>\n

According to the Agreement on Subsidies and Countervailing Measures (ASCM) <\/strong>of the World Trade Organization (WTO), a subsidy shall be deemed to exist if there is a financial contribution<\/strong> in form of the direct transfer of funds<\/strong> (e.g., grants, loans and equity infusion), and\/or government revenue<\/strong> that is otherwise due is foregone or not collected, and\/or a government provides goods or services<\/strong>, by a government or any public body where government is engaged<\/p>\n

In other words, \u2018Subsidy\u2019 can be any form of income or price support granted by the government. In fact, there is a distinction<\/strong> between various forms of subsidies<\/strong>: (1) transfer payments that are made for running social welfare schemes, and (2) other subsidies (like freebies) .<\/p>\n

Tax policy includes tax preferences like special tax rates, exemptions, deductions, rebates, deferrals, and credits. These are aimed for realising specific benefits<\/strong> serving the greater public good. For instance, to promote savings by individuals, and customs duty concessions <\/strong>are intended to promote exports.<\/p>\n

What are the issues in providing tax-preferences?<\/strong><\/h5>\n

There are situations when the objectives of tax-preferences <\/strong>are not realised, for instance, the 2019-20 corporate tax cuts did not result in higher private investment<\/strong> as the Government had expected.<\/p>\n

First, as compared to individuals, corporates have been enjoying a larger share of tax preferences, for all years except in 2019-20 when the share of individuals inexplicably increased. Further, the corporate sector is also enjoying lower tax rates<\/strong> than the income tax rates on individuals.<\/p>\n

Further, the government has reduced subsidies in agricultural sector, public health and education sector.<\/p>\n

(a) Public health expenditure has struggled to cross 1.5% of GDP, which is significantly lower than those in other major economies.<\/p>\n

(b) In education, the Kothari Commission\u2019s recommendation<\/strong> (1966), that public investment should be increased to \u201c6 percent of the national income as early as possible<\/strong>\u201d remains a distant dream.<\/p>\n

(c) Agriculture has remained a neglected sector. Its share has almost halved in recent years.<\/p>\n

(d) The market fundamentalists oppose these subsidies\/support to the health, education and agricultural sector. The spaces are being created for private players. <\/strong>For example, the Government had brought the controversial farm laws <\/strong>for dealing with the issue of increasing farm subsidies.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on the article \u201cFreebies, a judicial lead and multi-layered issue\u201d published in \u201cThe Hindu\u201d on 26th August 2022. Syllabus: GS 3 The Union Budgeting Relevance: Freebies; Subsidies etc. News: In the recent, the Prime Minister commented upon the \u201cfreebies\u201d handed out by the state governments. The Supreme Court of India… Continue reading \u2018Freebies\u2019, a judicial lead and a multi-layered issue<\/span><\/a><\/p>\n","protected":false},"author":10343,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10498],"class_list":["post-202097","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-the-hindu","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/202097","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10343"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=202097"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/202097\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=202097"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=202097"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=202097"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}