29 September, 2020

Who Funds The Bailout?

The second bailout of US-64 must be credited for being more focused on helping the smaller investors.

Who Funds The Bailout?
illustration by Saurabh Singh The proposed bailout of the troubled US-64 scheme by the government has two parties: one benefits from it and the other pays for it. In this case, there are three beneficiaries: a) the unit-holders, retail and corporate, b) uti employees and agents, and c) the government itself. The unit-holders are gifted a promise of at least Rs 10 for up to 3,000 units. The employees and agents have been able to partly salvage their reputations now that the government has come through in protecting unit-holders. The government, in the process, gets the aura of being a magnanimous protector of "small investors".

But there is no such thing as a free lunch, and the bailout is being paid for by the People of India. We pay taxes to fund the bailout. Everyone will suffer from an inferior quantity and quality of public goods, like bad roads and poor public education for our children, because public money is being used to help middle-class and rich unit-holders of US-64.

In 1998, the...


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