Showing posts from July, 2014

Revenue forgone or Industry forgone?

In the book 'an uncertain glory', Jean Dreze and Amartya Sen (p. 90) write this: 'The pernicious role of regressive subsidies applies not only to those that are visibly and explicitly given, such as subsidies on diesel or fertiliser, but also to implicit subsidies, notably those arising from what the Finance Ministry calls 'revenue forgone' - tax revenue that could have been collected, but was forgone on account of various exemptions and incentives. Some of these are justified, but many others are nothing more than disguised handouts to powerful lobbies, especially corporate lobbies' So far so good. Then they go on to say, ' ...the subsidies include more than Rs 57000 crores of custom duties forgone on 'diamonds and gold' alone...' and question such subsidies that can't be justified in an economy struggling with basic needs in terms of food security, health, sanitation and education. In a later chapter, (pp. 271-272), Dreze