Modi getting middle class to 'give it up'

Over one million people have opted to give up govt subsidies on items such as cooking gas

Indian Prime Minister Narendra Modi speaks during the inauguration of the 46th session of Indian Labour Conference in New Delhi, India.
Indian Prime Minister Narendra Modi speaks during the inauguration of the 46th session of Indian Labour Conference in New Delhi, India. PHOTO: REUTERS

Ms Manu Randhawa, a 45-year-old middle-class housewife, has enjoyed government subsidies on her cooking gas for as long as she can remember. Last week, she decided she could give it up after being persuaded by a government campaign - Give It Up - aimed at paring India's ballooning subsidies bill.

Launched formally by Prime Minister Narendra Modi in April, the campaign, an "opt out of subsidy" scheme, has been getting a high profile with television advertisements showing Mr Modi urging the well-off to give up their subsidies so the money saved can be channelled to poorer beneficiaries.

"I was a little unsure. But, then, the amount of money we actually give up is hardly anything," said the mother of two, who opted out of the subsidy scheme last Wednesday. The subsidy works out to just over 1,400 rupees (S$30) annually.

Ms Randhawa, who lives with her family in the city of Gurgaon, is among the 1.2 million people, including rich corporate executives, sports stars and actors, who have made the decision to give up their subsidies, saving the government more than 5.6 billion rupees a year.

Many households buy gas cylinders, each containing 14.2kg of liquefied petroleum gas (LPG), for cooking. Each cylinder is subsidised by around 200 rupees.

Mr Modi, who came to power last year, has made a renewed push to better manage India's massive subsidies regime, worth over US$40 billion (S$55 billion) annually. Among other things, he has dismantled state control of diesel prices and rolled out a scheme to credit cash subsidy payments directly into the bank accounts of beneficiaries, instead of through intermediaries, to cut out corruption.

The Give It Up campaign has attracted attention, with business houses such as Tata Sons urging their employees to give up the subsidy. But analysts said there would be little impact on the subsidy bill.

"This is only a small step. Middle-class India should not be given any subsidy at all," said Mr D.H. Pai Panandiker, president of private think-tank RPG Foundation.

"But it is a political issue, if you cut subsidy, you get voted out of power. Few people will give up, so the benefit to the government is not going to be large.

"The government should use this occasion when oil prices are down to clean up the whole subsidy policy, like the fertiliser policy."

Government subsidies are available for a wide range of items, including essentials such as rice, wheat, sugar, fuel, electricity and fertilisers. While they are mostly intended for the poor, some subsidies such as those on electricity, lower-fare railway tickets and cooking gas are universal.

Many Indians have argued that politicians need to give up their perks first before asking the middle class to make gestures, after news emerged that the government spent US$2 million in 2013-14 to subsidise the canteens in Parliament.

"If the common man can be asked to give up LPG subsidy, then why can't MPs be asked to give up their subsidy," said a Twitter comment.

Still, the ruling party believes the campaign has started out with a bang. The government goal is to get 10 million to opt out.

"It's a success. One million is the population of some countries, it's not a small number," said BJP spokesman G.V.L. Narasimha Rao.

Ms Randhawa, who received some negative comments on social media when she announced she gave up her subsidy, believes all well-off Indians should give up their subsidies even if the benefit to the poor was not quite clear.

"All these social causes we donate to, even there we are not sure if the money reaches the intended people," she said.

"So, then, why not this?"

A version of this article appeared in the print edition of The Straits Times on August 03, 2015, with the headline 'Modi getting middle class to 'give it up''. Print Edition | Subscribe