Do not villainise subsidies as they strengthen our economy: Krishna Byre Gowda

Revenue Minister Krishna Byre Gowda defends subsidies as crucial for economic growth, emphasising their role in boosting consumer demand during recessions.

Brushing aside concerns that spending huge funds on subsidies in the form of guarantees may affect the State’s economy, Revenue Minister Krishna Byre Gowda on Monday (March 23) maintained that subsidies given to the poor had gone a long way in strengthening the State economy, which was reflected in Karnataka topping the country in GST revenue growth and per capita incomes. He emphasised the need to stop “villainising and criminalising” subsidies.

“Boosting consumer demand by providing money to poor people in the form of subsidies is a sure-shot approach for economic growth wherever there is an economic recession,” the Minister told the Legislative Assembly, while responding to concerns expressed by BJP members that providing 14% of the budgetary funds as subsidies may negatively impact the State economy in the long run.

Referring to Keynesian economics, put forth by British economist John Maynard Keynes, who argued that the government’s intervention in the form of subsidies, which trigger increased spendings, is necessary to stabilise economies, Mr. Byre Gowda recalled that several economies had managed to strengthen themselves through such a mechanism.

“There are different kinds of approaches. Some feel that production side management should be strengthened through tax rate cuts and so on. But that will serve the purpose only when there is buying power. When we put money in the hands of poor people who are trying to make ends meet, they will not keep it for themselves. A rupee provided to them will circulate five times, creating a positive ripple effect on economy,” he observed.

He argued that money given to poor people in the form of subsidies would come back to the economy, providing a much needed boost to it. “But despite this, subsidies are being criminalised and villainised in several countries including India,” the Minister lamented.

At the same time, he made it clear that the government is mindful of the challenges in the future, and that it is maintaining the fiscal balance of the State.