The more money we get the happier we will be.

Poverty is the most thoroughly researched subject in economics, with professors spending vast amounts of time proving that if you hand out wads of cash to the poor they are able to spend more and feel much better. Er, if you hand over Rs 10 million to each of us we will also spend more and feel better and if you hand out Rs 100 million we will be joyous. However, the poor are not so happy. They feel that since they are the 'vote bank' money should be transferred from high street banks to them, and they produce lots of children to ensure that the vote bank is always growing. The government has started Direct Benefit Transfer, or DBT, to subsidise cooking gas for the poor, called PAHAL. " With nearly 150 million registered beneficiaries, it is probably the world's largest DBT programme ever," writes a professor." Yet, it accounts for only about 3.5% of the total annual flow of government subsidies. The provision of around Rs 200 billion for the scheme is about 8% of the total provision of Rs 2.50,433 trillion for subsidies in the 2016-17 Union budget. And Union subsidies in turn account for only about a third of total subsidies provided by the Union and state governments taken together. Thus, DBT under PAHAL is just a beginning in using DBT as the medium for providing subsidies. There is still a long way to go." God help us. The government provides subsidised foodgrains, kerosene and sugar through the Public Distribution System, or PDS, which is overseen by an army of civil servants to make sure that taxpayers do not benefit from the cheap food. If the PDS is also changed to DBT then the government will save enormous amounts of money. Very logical, except that you cannot open a bank in every village so how do villagers access money transferred to the nearest branch, which maybe miles away, with the dirt road converted to a muddy swamp during rains. To protect the health of the poor the government is giving away cooking gas connections at a cost of Rs 80 billion, but it turns out that villagers still prefer to use firewood and dried cow dung for cooking because these are free. So a lot words for nothing. However, doling out trillions of rupees in completely non-productive income is bound to have consequences for the economy. The result is that inflation is always bubbling away, ready to steam ahead. Retail inflation jumped to 5.39% in April from 4.83% in March. After falling for 17 months wholesale prices have moved into positive territory as food prices rise. Rural people spend 54.2% of income on food, so are very sensitive to food prices. Seems that politicians are playing a cute game to get rid of the present Governor of the Reserve Bank, who believes in keeping a tight lid on retail inflation. They probably want someone who will reduce interest rate, in the belief that low interest rate will stimulate growth and win them elections. The Congress thought the same. Where is it now?