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Union <a href="http://www.businessinsider.in/searchresult.cms?query=dharmendra+pradhan">Oil Minister Dharmendra </a><a href="http://www.businessinsider.in/searchresult.cms?query=dharmendra+pradhan">Pradha</a>n announced the government has capped subsidy payout domestic cooking gas, or <a href="http://www.businessinsider.in/searchresult.cms?query=LPG">LPG</a>, at Rs 18 per kg. 
 
The government had capped <a href="http://www.businessinsider.in/Finance-Ministry-fixes-kerosene-subsidy-at-Rs-12-per-litre/articleshow/48331153.cms">kerosene subsidy at Rs 12 per litre</a>. 
 
Kerosene through <a href="http://www.businessinsider.in/searchresult.cms?query=PDS">Public Distribution System</a> (PDS) is sold at Rs 14.96 per litre against the actual cost of Rs 29.91 and this cost difference is termed as under-recovery or revenue loss. 
 
While the government will provide Rs 12 to meet most of this, the remaining Rs 2.95 will be borne by oil producers <a href="http://www.businessinsider.in/searchresult.cms?query=ONGC">ONGC</a> and Oil India Ltd, said Pradhan. 
 
Likewise, there is an under-recovery or loss of Rs 167.18 on sale of every 14.2-kg subsidised LPG cylinder, which is sold at the current price of Rs 417.82. 
 
“At present, the state-owned fuel retailers incur under-recoveries on sale of PDS kerosene and subsidised domestic LPG only as petrol and diesel have been deregulated (market-linked) with effect from June 2010 and October 2014 respectively,” said Pradhan. 
 
He added for 2015-16, the government has approved budgetary support for PDS kerosene under-recovery at a rate of Rs 12 per litre and the remaining under-recovery will be borne by the upstream companies. 
 
Reportedly, for the first quarter of financial year 2016, the government will provide Rs 1,733 crore cash subsidy as per the new formula to Indian Oil Corp (IOC), Rs 404 crore to Bharat Petroleum Corp Ltd (BCPL) and Rs 451 crore to Hindustan Petroleum Corp Ltd (HPCL). 
 
Twelve LPG cylinders of 14.2-kg are supplied to every household at a subsidised rate of Rs 417.82 and LPG consumers get subsidy equivalent to the under-recovery directly in their bank accounts so that they can purchase a 14.2-kg bottle at market price of Rs 585. 
 
(Image: Indiatimes)

After kerosene, government caps LPG subsidy at Rs 18 per kg

Directly submitting the benefit into users’ bank accounts has helped eliminate duplicate connections as well as diversions, making the Indian Government save over Rs 21,000 crore in cooking gas <keyword id="6360114" type="ORGANIZATION" weightage="100" keywordseo="LPG">LPG</keyword> subisdy in the last two financial years. 
 
It was from November 2014 that the government has started to submit subsidy amount directly into bank accounts of cooking gas consumers in select districts of India, while from January 1st 2015, the practice was started in the rest of the country. 
 
As on April 1, 2015, there were 18.19 crore registered LPG consumers, while there were 14.85 crore active consumers, which means that 3.34 crore consumers were duplicate, fake or inactive accounts. 
 "Eliminating such 3.34 crore consumers helped save Rs 14,672 crore in 2014-15 fiscal (year ending March 31, 2015)," Oil Minister <keyword id="197418" type="PERSON" weightage="100" keywordseo="Dharmendra-Pradhan">Dharmendra Pradhan</keyword> said at a seminar on subsidies in New Delhi. 
 The year 2015-16 saw savings worth about Rs 7,000 crore, which was lower than the previous fiscal due to a fall in <keyword id="168256" type="UNKNOWN" weightage="100" keywordseo="Global-oil-prices">global oil prices</keyword> that affected the subsidy. 
 
<a href="http://d1pcxoetpnw26i.cloudfront.net/thequint/2015-04/17946c5c-5ea8-4a68-8f3d-f80e1ed33045/cylinder%20crop%20(Reuters).jpg">Image source</a>

Submitting LPG subsidy in bank accounts saved government a whopping Rs 21,000 crore

Believe it or not, <keyword id="113746" type="UNKNOWN" weightage="20" keywordseo="subsidies">subsidies</keyword> worth more than Rs 1 lakh crore are going to the well-off. The <keyword id="3261283" type="UNKNOWN" weightage="20" keywordseo="Economic-Survey-2016">Economic Survey 2016</keyword> vouched that subsidies for the well-off should be cut. 
 
The Economic Survey 2016 stated that Indian state's generosity is not restricted to its poorest citizens. In fact, in many cases, the beneficiaries are disproportionately the well-off. 
 
The survey stated the well-off were enjoying benefits on small savings schemes and tax or subsidy policies on six commodities -- cooking gas, railways, power, aviation turbine fuel, gold and kerosene. 
 
"We find that together these schemes and policies provide a bounty to the well-off of about Rs 1 lakh crore," the survey said, adding that these incentives benefit not the middle class but also the very top end of the income distribution. 
 
Modi had last month compared subsidies for the poor with tax breaks for the rich, saying "When a benefit is given to farmers or to the poor, experts and government officers normally call it a subsidy. However, I find that if a benefit is given to industry or commerce, it is usually called an 'incentive' or 'subvention'. We must ask ourselves whether this difference in language also reflects a difference in our attitude? Why is it that subsidies going to the well-off are portrayed in a positive manner?" 
 
The Economic Survey today said the Rs 1 lakh crore of subsidy going to the better-off merely on account of 6 commodities plus the small savings schemes represent a substantial leakage from the government's kitty, and an opportunity foregone to help the truly deserving. 
 
Among six commodities, the maximum subsidy to the rich is for LPG at Rs 40,151 crore followed by electricity Rs 37,170 crore, Kerosene Rs 5,501 crore, Gold Rs 4,093 crore, Railways Rs 3,671 crore and ATF Rs 762 crore. 
 
While subsidy on account of Public Provident Fund is Rs 11,900 crore taking the total to Rs 1,03,249 crore.

Rs 1 lakh crore worth subsidies going to the well-off, people who really don’t need them

Japan has announced a $221 million China exit subsidy for Japanese companies to shift their base to India and other regions. In April, amidst the coronavirus pandemic, outgoing <keyword id="1204728" type="PERSON" weightage="20" keywordseo="Japanese-Prime-Minister-Shinzo-Abe">Japanese Prime Minister Shinzo Abe</keyword> proposed building an economy that is less dependent on one country -- China, so that the nation can avoid supply chain disruptions. In mid-July, Japan's Ministry of Economy, Trade and Industry unveiled the first group of Japanese companies to subsidise shifting manufacturing out of China to Southeast Asia or Japan in a bid to build a more resilient supply chain. Ahead of the India-Japan summit, the Japanese government has announced it would add India and Bangladesh to a list of ASEAN countries to qualify for subsidies for Japanese manufacturers moving out of China. The move comes following a recent virtual meeting between the trade ministers of India, Japan and Australia to advance cooperation on building trusted supply chain resilience in the Indo-Pacific to reduce dependence on China, which is a major trade partner with all three countries. The SCRI (Supply Chains Resilience Initiative) is aimed to build an alternative supply chain, away from China. Commerce Minister Piyush Goyal explained, "diversification of supply chain is critical for managing the risks associated with the supply of inputs, including disciplining price volatility. We could provide the core pathway for linking value chains in the region by creating a network of reliable, long-term supplies and appropriate capacities". He further stated that the initiative could not have come at a more opportune time in the post-Covid-19 scenario when there is a likelihood of churning of supply chains in the Indo-Pacific region. He said that in May 2020, Prime Minister Modi had stressed that it is the need of the hour that India should play a big role in the supply chains. The Japanese government's supplementary budget earmarked 23.5 billion yen ($221 million) for businesses that wish to move their production to Southeast Asian nations from China. The country's manufacturers can now receive subsidies for pilot programmes and feasibility studies. The Japanese government's programme aims to ensure a steady supply chain of products like medical supplies and electrical components in case of any emergency. Currently, Japanese companies' supply chain relies heavily on China. The issue came to light during the Covid-19 pandemic when supplies from China were cut off. In the second round of applications, projects would contribute to the ASEAN-Japan supply chain, assuming that relocation will occur to India and Bangladesh. Feasibility studies on decentralising manufacturing plans were also carried out along with the experimental introduction of facilities. The first round of subsidies, which was announced in July, granted around 10 billion yen to 30 companies relocating their production sites to Southeast Asia. Another 57 firms are also receiving support for moving manufacturing facilities to Japan. Exodus of Manufacturing: Impact on China The movement of production capacity from China will increase unemployment in the communist country as jobs move away. The US-China trade tensions have already cost about two million industrial jobs in China. Its border aggression with India has seen the latter severe its trade and business ties giving China a major economic blow. China wants to move up the value chain and produce more high-tech goods as it has repeatedly indicated, for which it needs FDI and more open trade. China is beginning to miss out on these two factors as a result of the US-China trade war, tensions with neighbours on account of aggressive behaviour and suspension of human rights in Hong Kong. In the medium to long-term, China could see a larger negative effect on productivity. A reduction in productivity growth will hurt China's potential growth rate, which increasingly relies on technological innovation, rather than, for example, labour force growth. Finally, global value chains from China will be disrupted with countries like India, Bangladesh and the southeast Asian region taking away the giant's business. SEE ALSO: <a href="https://www.businessinsider.in/tech/news/its-not-just-india-chinese-intelligence-has-its-eye-on-more-than-2-4-million-individuals-across-the-us-japan-canada-australia-and-the-uk/articleshow/78101034.cms">It's not just India — Chinese intelligence has its eye on more than 2.4 million individuals across the US, Japan, Canada, Australia, and the UK</a> <a href="https://www.businessinsider.in/defense/news/india-china-border-tension-will-be-in-focus-as-the-parliaments-monsoon-session-begins-today/articleshow/78098575.cms">India-China border tension will be in focus as the Parliament's Monsoon session begins today</a> <a href="https://www.businessinsider.in/finance/banks/news/all-eyes-on-parliaments-monsoon-session-the-banking-regulation-amendment-bill-2020-may-not-be-on-the-docket-for-long/articleshow/78101791.cms">All eyes on Parliament's Monsoon session — the Banking Regulation (Amendment) Bill 2020 may not be on the docket for long</a>

Japan offers $221 million as 'China-exit' subsidy for Japanese companies

<ul><li>The two countries have pointed out that the $160 billion-worth of farmer <keyword id="113746" type="COMPANY" weightage="20" keywordseo="subsidies">subsidies</keyword> in developed markets distort the global <keyword id="44844" type="ORGANIZATION" weightage="20" keywordseo="Trade">trade</keyword> order. </li><li><keyword id="3658" type="COUNTRY" weightage="20" keywordseo="India">India</keyword> and <keyword id="1334" type="COUNTRY" weightage="20" keywordseo="China">China</keyword> recommend that these countries halve the difference between the level of support they provide and the maximum level of support allowed by <keyword id="6357761" type="UNKNOWN" weightage="20" keywordseo="WTO">WTO</keyword> by 2019. </li><li>In July last year, India and China said that rich nations provide subsidies of between 50%-100% of the total value of production of commodities like wool, cotton and tobacco. </li></ul>After years of receiving flak for their farmer support schemes, New Delhi and Beijing have jointly called for an end to farmer subsidy schemes in developed markets like the United States and European Union (EU). The two countries are arguing that the $160 billion-worth of subsidies to <keyword id="45092" type="COMPANY" weightage="20" keywordseo="farmers">farmers</keyword> in developed nations like the <keyword id="6354458" type="UNKNOWN" weightage="20" keywordseo="US">US</keyword>, EU and Canada for commodities like cotton and tobacco are a contravention of global trade rules because they distort the market. Specifically, India and China recommend that these countries take steps to halve the difference between the level of support they provide and the maximum level of support allowed by WTO. The latter measure, referred to as the Aggregate Measurement of Support (AMS), caps a subsidy at 10% of the total value of production for a developing country, and at 5% for a developed nation. India and China don’t expect change to happen overnight and without any resistance. They have reportedly proposed a series of steps that these countries can take to gradually reduce their support schemes by 2019. As mentioned <a href="https://www.businessinsider.in/america-doesnt-like-indias-farmer-subsidies-and-thats-unlikely-to-change-anytime-soon/articleshow/64123715.cms">before</a>, farmer subsidies are an important point of contention between India and the US, with the latter expressing disapproval at the former’s MSP schemes for wheat and rice. The WTO divides agricultural subsidies into three categories - green box, comprising non-trade distorting schemes; blue box, comprising subsidies that are slightly trade-distorting; and the AMS or amber box, those subsidies that are significantly trade-distorting and need to be phased out. Up until now, because of the way WTO rules are drawn up, most of the support given by rich nations to their farmers fall under the “green box”, since this involves direct income support. Meanwhile, schemes used by developing countries like minimum support schemes come under the “amber box”. In a proposal submitted in July last year, India and China pointed out that the support rich nations provide to their farmers goes up to between 50%-100% of the total value of production of some commodities such as butter, rice, wool, cotton, tobacco, olive oil and tomatoes. The paper received the support of around <a href="https://www.livemint.com/Politics/rw3CgevdnrSbzGOtbJ3mVP/Over-100-nations-back-IndiaChina-plan-on-farm-subsidies-bef.html">one hundred countries</a>.

India, China join hands to demand an end to farmer subsidies in wealthy nations

<ul><li>The US has said that India’s p<keyword id="13726" type="PERSON" weightage="20" keywordseo="rice">rice</keyword> support schemes for rice and <keyword id="47374" type="COMPANY" weightage="20" keywordseo="Wheat">wheat</keyword> violate the <keyword id="6357761" type="ORGANIZATION" weightage="20" keywordseo="WTO">WTO</keyword>’s 10% cap on <keyword id="113746" type="COMPANY" weightage="20" keywordseo="subsidies">subsidies</keyword> for agricultural products. </li><li>India has refuted the claims and will challenge the notification at a WTO meeting in June 2018. </li><li>However, the situation is unlikely to be resolved in the foreseeable future due to India’s domestic policies with respect to food security as well as the fundamental flaws of the WTO’s agriculture agreement. </li></ul>Earlier this week, the Office of the US <keyword id="44844" type="ORGANIZATION" weightage="20" keywordseo="Trade">Trade</keyword> Representative, Robert Lighthizer, said that it had issued <a href="https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/may/united-states-issues-first-ever-wto">a counter-notification</a> - the first ever of its kind - against India for violating the WTO’s Agreement on Agriculture. The US government alleged that India underreported its subsidies and that its scheme of minimum price support (<keyword id="133827" type="COMPANY" weightage="20" keywordseo="MSP">MSP</keyword>) for wheat and rice was against the rules of the agreement. The US explained that India’s price support for wheat and rice constituted more than 60% and 70%, respectively, of the value of total production between 2010 and 2013 - the years that India provided data for. The WTO’s agriculture agreement stipulates a 10% cap on market price support as a proportion of total production. In response, India’s trade envoy J.S Deepak debunked the claims, explaining that the US had used <a href="https://www.livemint.com/Politics/fbwI9rXUmaGWFRoUr1tiJO/India-rejects-US-charge-on-price-support-steps-breaching-WTO.html">“flawed assumptions and erroneous methodologies”</a> in its calculations. Limited scope for resolution The Indian government is expected to challenge the notification at the next meeting of the WTO’s Committee on Agriculture, which is scheduled for June 2018. While it remains to be seen what its argument will be, it can seek to differentiate the support given by the central government and state government (the WTO rules only cover central support) or even point to discrepancies in <a href="https://economictimes.indiatimes.com/news/economy/foreign-trade/india-prepares-to-counter-us-charges-on-farm-subsidy/articleshow/64118140.cms">currency conversions. </a> Despite India’s justifications, however, the situation is unlikely to be resolved in the foreseeable future. Not only does this have to do with India’s domestic policies with respect to its farmers and food security, but also due to the fundamental flaws of the WTO’s Agreement on Agriculture. Domestic policies vs international trade commitments The Indian government is faced with a choice of either keeping its citizens and farmers happy or abiding by the WTO’s rules. It is obvious that it will side with its electorate. The government spends a lot of money on food subsidies and price support schemes. It has allocated <a href="https://www.indiabudget.gov.in/ub2018-19/bag/bag6.pdf">nearly ₹1.7 trillion</a>, or 7% of its total budgeted expenditure, in its Union Budget for 2018-19 to food subsidies. These subsidies are an important component of the country’s National Food Security Act of 2013, which is aimed at providing essential grains at subsidised prices. Rice and wheat constitute the bulk of government procurement and are hence, given the most price support. Under the act, rice and wheat are priced at <a href="https://www.financialexpress.com/economy/wheat-at-rs-2kg-rice-at-rs-3kg-know-all-about-modi-govts-food-security-act-implemented-across-states-from-november-1/437392/">₹2/kg and ₹3/kg</a>, respectively. Even though the price support schemes are for domestic purposes and not for trade, India has consistently drawn the ire of the US and other developed members of the WTO. Due to India’s status <a href="https://in.reuters.com/article/usa-trade-india-grains/india-giving-rice-and-wheat-production-vast-support-u-s-tells-wto-idINKBN1IA2Q4">as one of the world’s top exporters of rice</a>, these countries are concerned that its domestic policies have led to excessive production and consequently, a spill into global markets. Given India’s emphasis on food security for its people, it does not look like the country will curb its support for rice and wheat production anytime soon. In fact, in February, the BJP government also announced a universal minimum price support scheme for all kharif and rabi crops at <a href="http://pib.nic.in/newsite/PrintRelease.aspx?relid=176062">1.5 times their total production cost</a> as part of a plan to double farmer’s incomes by 2022. An outdated and unfair WTO agreement Despite being drawn up in 1995, the WTO’s <a href="https://www.wto.org/english/docs_e/legal_e/14-ag.pdf">Agreement on Agriculture</a> is still enforceable today. And it does not take into account current market prices when measuring subsidies. Rather oddly, the agreement measures a country’s minimum support price scheme in comparison to prices of agricultural products between 1986 to 1988. Simply put, under the agreement, if the minimum support price of a product is more than what its price was 30 years ago, the difference is calculated as a subsidy. Furthermore, this subsidy should not exceed 10% of the crop’s production value. Additionally, the agreement separates agricultural subsidies <a href="https://www.wto.org/english/tratop_e/agric_e/agboxes_e.htm">into three categories-</a> green box, comprising non-trade distorting schemes; blue box, comprising subsidies that are slightly trade-distorting; and amber box, which comprises subsidies that are significantly trade-distorting and need to be phased out. This system <a href="https://www.theguardian.com/global-development/poverty-matters/2013/nov/27/farming-subsidies-distort-advantages-food-insecurity">fails to take the needs of developing countries fully into account.</a> While the subsidies that rich countries mostly provide, like direct income support to farmers, come under the green box category, minimum price support schemes, which are used by many developing countries for food security and public stockpiling, go under the amber box. The unfair nature of the Agreement on Agriculture was a key talking point at the WTO meeting in Bali in 2013. Following the passage of its National Food Security Act that year, India realised <a href="https://economictimes.indiatimes.com/news/economy/foreign-trade/india-softens-stand-on-food-subsidies-at-wto-bali-meet-prospects-rise/articleshow/26059578.cms">that its food subsidies would exceed the 10% cap</a>. Hence, a <a href="https://www.wto.org/english/thewto_e/minist_e/mc9_e/desci38_e.htm">“peace clause” </a>was implemented wherein developing countries like India were given an additional four years to comply with the norms. In December 2014, the time period for the peace clause <a href="http://indianexpress.com/article/india/india-others/understanding-the-permanent-solution-at-wto/">was made indefinite </a>until a permanent solution was reached. Which leads us to now It does not look like India will compromise on its domestic policies. A possible solution could be the revision of the Agreement on Agriculture. And what would this entail? Subsidies should be calculated in accordance with current prices and the public stockpiling programmes of developing countries should be excluded from consideration or given lesser weightage. But it is unlikely that this will happen anytime soon. There doesn’t seem to be any danger of a trade war as it would be significantly worse for all parties involved than the current state of affairs - an indefinite stalemate. So the US and India will keep squabbling in the hope that one of them relents.

You Searched For "subsidies" and got 6 results

After kerosene, government caps LPG subsidy at Rs 18 per kg

BI India Bureau

Submitting LPG subsidy in bank accounts saved government a whopping Rs 21,000 crore

BI India Bureau

Rs 1 lakh crore worth subsidies going to the well-off, people who really don’t need them

BI India Bureau

Japan offers $221 million as 'China-exit' subsidy for Japanese companies

IANS

India, China join hands to demand an end to farmer subsidies in wealthy nations

Dilsher Dhillon

America doesn’t like India’s farmer subsidies and that’s unlikely to change anytime soon

Dilsher Dhillon

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