Religious Subsidy? Try Handout to National Airlines

Passing through the United Arab Emirates and I picked up an interesting story on India’s Supreme Court ordering an end to subsidies for India’s Haj pilgrims.

On the face, it is surprising the Indian Muslim community supported the order. Until you read that under regulations  the air route has been shared by national carriers Air India and Saudia  since 1984. And no-one else. Result?

[…] the government pays 38,800 rupees out of the 54,800 rupees price of the ticket; pilgrims pay the remaining 16,000 rupees.

This amounts, said Asaduddin Owaisi, a member of parliament from the city of Hyderabad, to simply being a subsidy for Air India. Ticket prices would be far lower, he said yesterday, if Air India’s monopoly were broken and pilgrims simply bought their own, unsubsidised tickets on other airlines.

So government shouldn’t get involved in promoting religions; I think that principle has been fairly well established over time. Good to see Hindu and Muslim clerics agreeing on that.

But clearly not just on grounds of separation of church and state. Equally on another couple of grounds: rent-seekers wanting to promote activities they profit from, and national champions wanting to stay fat and lazy.

National champions are by definition crony capitalists. Their existence, and their financial and regulatory support from the government is purely political. And that delivers windfall gains to those who are politically connected. In this case, connected by being in a bureaucracy that a government wants to maintain.

The loser is always the consumer, whether religious or not.

Pity the French just voted for a champion of national champions. More of a pity that they had no choice – none of the major candidates offered anything else.

As an aside, it is encouraging to see Mr Owaisi focusing on real issues that truly affect his Muslim constituents, rather than playing the hatred card that so often flares up in Indian politics:

“Removing the subsidy won’t be unpopular at all,” he said. “What would be unpopular would be to not get schools, or to be harassed by the police. Those are the important issues.”

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