Chapter 3: ‘Wiping every tear from every eye’: the JAM Number Trinity Solution

Why subsidy/Govt. support is necessary?

Economic growth has historically been good for the poor,

1. because it raises incomes, and
2. it gives the state resources to provide public services and social safety nets that the poor need (more than anyone else).
3. The opportunities created by growth also encourage individuals to invest in their own human capital.

But growth needs to be complemented with active government support to improve the economic lives of the poor and vulnerable. The issue is how best to deploy fiscal resources in support of that goal.

Price subsidies have formed an important part of the anti-poverty discourse in India and the government’s own policy toolkit.