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Abstract

In this study subsidies are considered both an element of government expenditure and a source of household income. The impact of reallocating existing subsidy expenditures to elected alternatives are estimated upon factors such as growth, employment, personal savings, indirect ta and import using a semi-closed input-output model. The results indicate substantial scope for deriving additional benefits by reallocating the existing subsidies on foreign wage earnings and urban food ration (enjoyed by the richer classes) to fertilizer, food grain procurement or rural food ration (enjoyed by the poorer classes). Reallocation of fertilizer or rural food ration have no benefits. The benefits of reallocation of production activities are higher than for consumption activities.

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