Trickle-down does work

President Pranab Mukherjee was probably echoing the sentiments of many in the ruling coalition, and the National Advisory Council (NAC) when he said, in his inaugural address, “trickle-down theories do not address the legitimate aspirations of the poor”. Indeed, much of the government’s policies are premised on this belief, which is why expenditure on subsidies, which was 1.6% of GDP when the NDA demitted office, rose to a whopping 2.6% of GDP in FY12—and that’s not calculating the under-recoveries borne by PSU oil firms; add this and the current subsidy expenditure may well rise to 3.6% of GDP.

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