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Useful tips for policy makers

On the face of it, the comparison between the price of ice cream and that of rice for the poor appears to be odious, but it has been rightly remarked in the editorial ‘Beyond ice cream’ (July 13) that the Finance Minister must look at issues in totality. It is an absurd logic that if an increase in the price of ice cream is accepted, then the rise in the price of rice should also be accepted as a reality.

The money or revenue generated from one segment need not necessarily be spent on the development of that segment only. The resources generated should be wisely and strategically spent on the development of other sectors so that economic welfare in a country can be maximised.

The simple concept of ‘consumer surplus’ and its principles, if applied in deciding the fate of subsidies and levying of taxes, can guide the policy makers. ‘Consumer surplus’ is the difference between what a consumer is ready to pay and what he actually has to pay for a given commodity. This difference can guide the economic policy makers in deciding the after-effects of tax and subsidies.

Ice cream consumers derive more ‘consumer surplus’ as the difference between the ready-to-pay price and the actual price is naturally high, as the ice cream consuming segment is not bothered much about the price of the product and hence if the price of ice cream is raised, it is accepted without much noise.

But if the price of rice is increased due to any reason, it tends to pinch the poor badly because ‘consumer surplus’ derived by this segment is almost nil. Therefore, it is advisable that the economic think tank should mull over the idea of collecting revenue from the sector and product where ‘consumer surplus’ is high and try to give benefit of subsidies in those sectors where ‘consumer surplus’ is low.

With this end in mind, the comparison between the prices of ice cream and rice can be fruitful for the economy and its constituents. Levying taxes on the affluent and generating revenue from such sources can thus be effectively utilised in providing subsidies to the needy and deserving segments. Blindly withdrawing subsidies would drastically reduce the economic welfare level in the country as there are many ‘Indias’ within India. If all the Indias are made to help and coordinate with each other, the benefits and their effects can be magnified effectively.



The worthy Home Minister must be aware that not more than half of our population can afford an ice cream and the majority is hardly getting two square meals a day. Many decades ago, a Hindi film 'Fasla' displayed the wide gap between the rich and the poor illustrating that one had 34 rooms to sleep and on the contrary 34 persons were sleeping in one room. That ‘fasla’ (gap) has widened manifold now.

The rich have become richer and the poor poorer. In the words of John F Kennedy,' If a free society cannot help the many who are poor, it cannot save the few who are rich'.

DP JINDAL, Mandi Gobindgarh

Power in wrong hands

Indian politics is today infested with corruption, criminalisation, opportunism, hypocrisy and sycophancy. Politics, once a mission to serve the people, has become a business and a commodity. Unscrupulous politicians, having a nexus with wayward bureaucrats and greedy industrialists, are relentlessly looting national wealth and stacking black money in tax havens abroad.

These people are, sadly, proving Winston Churchill right as he had commented on the eve of India’s Independence, “Power will go to the hands of rascals, rogues and freebooters.”

Wg Cdr GURMAIL SINGH (retd), Chandigarh

Success models

To meet the power requirement, PSPCL has been purchasing power from the market at exorbitant rates when setting up new plants under the public sector is a much better option. The Punjab government’s claim since 2007 to make the state power-surplus within two years with the commissioning of three new power plants in the private sector has proved futile. Firstly, these power plants are in the uncertain period of wait. Secondly, even by adding their combined capacity of 3,000 mw, the power needs shall not vanish. Already PSPCL is short of more than 4,000 mw. By the time these power houses become functional (say in two years) the power need will have gone up tremendously.

Punjab must take a leaf out of Gujarat and Bihar success stories and take initiatives for new employment-oriented projects to solve various problems. Talking too much and achieving too little is not going to help the Akali-BJP government. Their dream to rule the state for 25 years shall soon end.

The Punjab power generation policy has failed miserably and there is no visible hurry to correct it. The poor power situation is man-made and not due to monsoon failure or the unprecedented demand as made out by the CM or PSPCL. Serious continuous planning is required if the Punjab economy is to survive.


Exams must

I fully agree with Dr H Kumar Kaul’s views expressed in his letter “Abolition of examinations futile exercise”, July 5). He has rightly suggested that the present system of examination should strive for qualities of validity, reliability, objectivity and administrative ease.

Sometimes in our anxiety to improve things, we spoil the situation. We try to be innovative ignoring the ground reality. This is exactly what the Human Resource Ministry is doing in respect of the examination system. True that this system has many drawbacks like mass copying. But to abolish examinations instead of improving the system is no solution. No surgeon in his senses would like to cut off the nose to remove a pimple on it.

MK KOHLI, Gurgaon



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