PM Modi says true reforms are those that lead to transformation of lives

Promising reforms that will transform lives, Prime Minister Narendra Modi today said the government will not eliminate all subsidies but will rationalise and target them to the needy.

He said unnecessary controls and distortions will be eliminated and promised efficiency in allocation of resources as well as creation of opportunities for citizens to progress.

“I am not arguing that all subsidies are good. My point is that there cannot be any ideological position on such matters. We have to be pragmatic. We have to eliminate bad subsidies, whether or not they are called subsidies.

“But some subsidies may be necessary to protect the poor and the needy and give them a fair chance to succeed. Hence my aim is not to eliminate subsidies but to rationalise and target them,” he said addressing the Economic Times Global Business Summit here.

He also took a dig at economists and corporates saying any dole for industries is called incentive or subvention while for farmer it is derogatorily called subsidy.

“We must ask ourselves whether this difference in language also reflects a difference in our attitude? Why is it that subsidies going to the well-off are portrayed in a positive manner?” he said.

He said the total revenue lost due to incentives to corporate tax payers was over Rs 62,000 crore while dividends and long term capital gains on shares traded on stock exchanges are totally exempt from income tax even though it is not the poor who earn them.

Modi said since it is exempt, it is not even counted in the Rs 62,000 crore.

Double Taxation avoidance treaties have in some cases resulted in double non-taxation and this too is not counted in the Rs 62,000 crore.

“Yet these are rarely referred to by those who seek reduction of subsidies. Perhaps these are seen as incentives for investment. I wonder whether, if the fertiliser subsidy is re-named as ‘incentive for agricultural production’, some experts will view it differently,” he said.