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Economy

CEA Nageswaran critiques 'free' public services as fiscally unsustainable, highlights infrastructure pricing challenges

Hindustan Times - IndiaPrelims · EconomyMains · GS3 Economy

Chief Economic Advisor V Anantha Nageswaran warned that free public services lead to economic inefficiencies and infrastructure underinvestment, advocating for rational pricing to ensure sustainable development.

  • Fiscal Sustainability: CEA Nageswaran argued that free public services like water create moral hazard, leading to overconsumption and waste, ultimately straining public finances and infrastructure maintenance.
  • Investment Disincentives: Below-cost pricing of utilities deters private investment in infrastructure projects due to uncertain returns, hampering long-term economic growth and service expansion.
  • Regressive Impact: Free services often benefit connected households while the poorest without access pay higher prices to private providers, exacerbating inequality in service delivery.

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Polity & GovernanceGS2