- Indian citizens have been witnessing something anomalous over the last couple of years leading up to the elections, state as well as general election. Every political party, irrespective of ideologies and philosophies, is bandying about freebies, sops, and guarantees, assuring the electorate monetary incentives of a vivid nature. Free electricity at certain units, free travel in state transport even though loss making, allowances to the unemployed, allowances to the women head of a family, and the list goes on. Even though no less than Prime Minister Narendra Modi dissuaded freebie culture during the general elections, his party has gone one step ahead in announcing the same in several state elections. Did someone mention what happens to fiscal prudence?
PC: Business Today
- Who cares is the attitude shown by the political leaders/party’s wishing to assume power at any cost even if it goes against fiscal prudence. Needless to mention, funding cash handouts, especially the rash of schemes for women, is a recipe for fiscal emergency for several states actively pursuing the same. Joining the queue is none other than the newly minted Delhi CM presenting her debut budget, allocating Rs 5,100cr to fund women’s cash scheme of Rs 2,500 per month – a poll promise. This is less than half of what may be required to service beneficiaries of the scheme, estimated at 38L if beneficiaries are women whose household income is less than Rs 3L per annum. The budget already shows the strain of financing freebies. Doesn’t make sense at all.
PC: ThePrint
- It includes dipping into small savings (NSSF) to the tune of Rs 15k cr. As reported, last year, the Union Finance Ministry had frowned upon such practice, saying it disrupts the broader borrowing framework when AAP was in power. The erstwhile CM had proposed it in order to continue the AAP government’s welfare schemes of free electricity etc. The fact of the matter is that states with similar cash transfers to women are under severe financial strain. From Maharashtra’s BJP-led government to Karnataka and Telangana’s Congress governments and the former AAP government in Delhi, the finances of the richest states are stressed over poll time’s unrestrained largesse. It’s not about breaking promises – if poll promises were kept, India would’ve been developed by now.
PC: The Hindu
- The issue is far more grave – freebie culture has no winners. Funding freebies will eventually make the state broke; not servicing the promise may have an electoral fallout. In Maharashtra, since June 2024, the fiscal deficit has nearly doubled from Rs 1.1L cr to Rs 2.2L cr. The state spent Rs 87k cr more than the budget estimates for 2024-25 – much of it to fund the earlier Mahayuti government’s poll promises. Both the women’s handout scheme and the monthly stipend for jobless youth are costly affairs but just placebos to dull the pain of jobless youth and destitute women. Mind you, GOI’s capex levels are down. India can’t upgrade unless its states invest in creating enabling economic conditions. Freebies are not the answer to this.
