As on March 1, 2015, 63 percent of Indian consumers had access to a Liquefied Petroleum Gas (LPG) connection to cater to their cooking energy needs. LPG was highly subsidized by the Government for the benefit of the poor. However, the subsidy benefits were mostly cornered by a handful of economically well-off urban households, as a result of which the underlying objective of the subsidy program was at stake in India. On March 27, 2015, Narendra Modi, the Prime Minister of India, launched the LPG subsidy 'Give It Up' campaign. The objective of the campaign was to induce the better off sections of society to forgo their LPG subsidy so that it could be put to better use for the poor. Within four months of the launch of the campaign, more than 1 million consumers had given up their subsidies, in the process helping the Government save Rs.1400 million which could be used to fund developmental projects for the nation. The LPG subsidy policy of the Indian government was caught in the regulated vs. deregulated price regime debate, as the policymakers sought to balance the twin objectives of providing subsidized LPG to the needy with controlling the burden on the public exchequer. LPG being an essential commodity was subsidized by the government to help the people in general and the poor in particular so that they could benefit from it, but the economically advantaged people were proactive in garnering the benefits of the scheme.

Write a answers to the following questions.

Q. (a) Critically explain the subsidy issue related to LPG pricing in India.

Q. (b) In general collects revenue from taxation but subsidies increase government expenditure. Explain the pros and cons of giving subsidies.