Coupons are Less Efficient Cash Transfer

The Star Online: Two-tier pricing system, coupons for packet cooking oil to be discussed next week, says Salahuddin.
https://www.thestar.com.my/news/nation/2022/12/06/two-tier-pricing-system-coupons-for-packet-cooking-oil-to-be-discussed-next-week-says-salahuddin

("The coupon (system) proposal has been submitted by the previous minister but has yet to be implemented. So, these two proposals will be brought to the NACCOL meeting," he said in a media conference after the engagement session that took place at the ministry here.)

Coupons are not subsidies. It is a form of cash transfer. It is a form of subsidy in that coupons are restricted, so is not as efficient as cash transfer, but at least not as damaging.

Coupons are fair because the rich or poor receive the same amount, or better still the poorer should get more rather than the opposite as what happens in subsidies.

The delay in implementing shows you how concerned the government were with the poor. Absolutely zero concern. The government was just lying to the people especially the poor, that it was concerned with the welfare of the poor. The poor is to be blamed to blindly trust a government that never care for the poor, which resulted in the destruction of the economy, the GDP.

Any subsidy where money is paid to sellers to reduce prices for everyone, citizens or not, cannot contribute to the wealth of the nation, i.e.  GDP. It is just wasted.

Worse, any rich people benefiting from subsidy, which is up to half of the subsidy total, will end up as extra savings which do not contribute to GDP. This is a double blow.

Coupon or cash transfer given to the poor will lead to more GDP because they cannot afford to save. Some leakage to the rich, but ultimately will lead to GDP once utilised.

Coupon not efficient because they can be sold for cash but at discounted prices by the poor who need to buy more important essentials. Oil is not healthy so worthwhile to spend on vegetables even at a loss.

If tied to IC, the same can happen. The oil can just be sold at an even higher discount, which ends up in losses to the poor.

 Cash is the most efficient and cheapest way to help the poor.

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