BR1M is a Government’s initiative to provide aid to the lower income groups of Malaysia. It is a form of subsidy to atargeted group of people only. Thus, Government could avoid wastages by offering subsidies to high-income groups.
- Increase Spending Power
Hike in the cost of living pressurizedMalaysians with asmall income. Handouts like BR1Mto thetarget group area good initiationrather than bulk subsidy which will also benefit the rich and foreigners. It effectively increased the poor people disposable income.
The needy may use this money for necessities such as milk, food, rent, clothes and utility bills. This can increase the money circulation which indirectly helps to raise the domestic economy such as the markets, farmers etc., It provides Individuals and families breathing space and also increased living standards.
2. Boost consumer sentiment
By offering BR1M aid to the lower income Malaysians, SMEs (small and medium enterprises) will also get benefited. This is because of the increase in the domestic consumption of lower income group. The higheramount of BR1M aid stimulates more sales and services.
Increasing domestic consumption is primary step to fuel the economy. When the economy is low consumption power is also low.
- Balance other initiatives
BR1M is not merely a handout to poor Malaysians but also a Government initiative to assist them.These include subsidies on consumer goods, price controls on necessary food items, subsidised medical treatment,free education, affordable homesand financial help to the elderly and handicapped.
Targeted subsidies are more effective as they are given to needy people only. It enables Government to prioritise welfare concerns of poor along with respecting companies and corporations profit motives.
- Channelised Subsidies
Long term dependency on subsidies is not sustainable. Increasing subsidies reduce thecost of goods but funding may be required in another aspect like health or education. In short, Subsidy is a malicious cycle that won’t result in country’s economic growth.
With programs like BR1M Government can help those who will be hit hardest by inflation. As BR1M is a targeted subsidy, it lets inflation to be managed properly.
By providing aid to low-income group, their spending power increases. It contributes to the economic growth of thecountry. BR1M enhanced Malaysian’s standard of living by the providing financial aid.