New Delhi, April 23 -- In a 12-page open letter to Prime Minister Narendra Modi, global equity research and brokerage firm Bernstein has cautioned that India's dependence on welfare schemes is doing more harm to the economy than good.

"A rupee locked into broad, politically timed cash schemes is a rupee not building roads, logistics, irrigation, power distribution, public transport, schools or hospitals-areas where the multipliers are higher and the productivity gains are more durable," the firm observed in the letter.

It asserted that subsidies, where a small productive group of taxpayers is used to provide cash to the broader population, particularly to win votes either reflects "the ills of democracy" or the "economic failure of the ...