Viswanathan K's Thoughts

Mohit Satyanand asked this interesting question in Outlook Money as to why the same government that considers it necessary (and even desirable) to subsidize diesel and LPG in the name of protecting the poor wants to, on the other hand, charge the “correct” (read higher) price for telecom spectrum. After all, he argued, the cellphone revolution has benefited the poor just as much as everyone else, so any increase in spectrum price will impact the poor too (the telecom companies would pass on the increased cost of spectrum to the consumers by hiking telecom tariffs). I guess the answer is that the 2G scandal has forced the government to switch to market economics in case of telecom. The day we have an equivalent scandal in the fuel segment, maybe we’ll see fuel prices being determined by market forces too. Then again, as Greece now threatens, countries often prefer populism over paying the bills, prefer to default on their loans than to pay their creditors. You could explain what the...

In my company, they give gift vouchers as rewards. Sure, you get to pick the mall or store from which the voucher is issued, but it’s not the same as cash. When I asked why they don’t give cash, I was told that when the reward comes as cash (and hence as part of the salary), people don’t even realize they got an award! But with a voucher (or so they told me), you know exactly what you got as a reward. The association to the reward is clear, but not so with cash. With that reasoning in the background, it was interesting to read about this reform discussion in the budget as to whether it was better to give cash (instead of subsidies) to the poor. Those in favour feel that cash can be targeted at the people who are poor, whereas subsidies end up getting doled out to even those who don’t need them. (Think of the amount you pay for that gas cylinder to see the point). Plus, the cash option gives the poor to use the money the way they want rather than having the government decide the items ...