Neutral impactEconomy
'Free is the most expensive word in public policy,' says CEA Nageswaran
Economic Times 2 hrs ago·3 Aug 2026, 9:13 am
Chief Economic Advisor V Anantha Nageswaran has cautioned that the concept of 'free' utilities is economically unsustainable. Speaking at the CII Tamil Nadu Infrastructure Summit, he argued that providing essential services like water below cost erodes the financial health of infrastructure projects and encourages wasteful consumption.
This stance signals a potential shift in policy, moving away from subsidies toward a model where users pay fair market prices. However, the government is expected to maintain safety nets for the economically vulnerable through direct support rather than blanket freebies.
For investors, this highlights the long-term importance of pricing power and regulatory stability. A move toward cost-recovery pricing could improve the operational efficiency of utility companies, but it may also face short-term political resistance. Market participants should monitor the government's implementation strategy closely.
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