Saturday, February 20, 2010

While the freeloading keeps repeating in glowing terms how the economy is growing at 7.2% and may reach 8% growth nest fiscal it seems that the government is mulling possibilities of going back to the old system of everyone owning a ration card. In the past every Indian owned a ration card which could buy you substantard rice or wheat and sugar at rates much lower than the open market. The grains were of such poor quality that only the most desperate would avail of their grain rations. However everyone took their quota of sugar every week because you cold strain out bits of glass after the sugar was dissolved. Ration shop owners sold stocks at very high profits in the open market and adulterated the rest to make up the weight. Apparently the criminal politicians have woken up to the fact that 50% of children are underweight and 75% of women are anaemic so the thinking is that everyone should be provided with subsidised food. Food subsidy will rise from Rs. 524.9 billion to Rs. 1368.3 billion, a rise of Rs. 844 billion. At the same time the government is determined to increase indirect taxes, VAT and service tax, from 10% to 12% which was the rate before the financial collapse in 2008. The growth in the economy was only due to the cut in tax rates and increasing indirect taxes at a time when interest rates are also going up will reduce consumption and hurt growth. Also true inflation as measured by the cost of living will jump but, of course, the government only measures the wholesale index which hides the pain. It is the same old plan. Increase poverty by increasing taxes and then dole out alms. It is the tried and tested method for the Congress to win votes but the press would never tell you so.

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