Sunday, December 21, 2008

About the Political Spin on the Rice/Flour Subsidies

Ramgoolam would have us believe that his government has a heart because he has kept these subsidies even though they are costing Rs1.3 billion instead of the Rs700 million they did a few years back. Not exactly what happened. Sithanen in his first bean-counting budget cancelled them but had to quietly reintroduce them after the civil society raised its voice.

We also have to put things in their right perspective. We could do this by looking at how much money is left if we subtract these subsidies from the VAT receipts that government has collected on super-high oil prices from us. Which is what I've done in the graphic above. Turns out government has a billion more left after paying the bigger subsidy.

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