The Wages of Past Populism

/2 min read
Maharashtra’s budget scrambles to fill the hole left by an election sop
The Wages of Past Populism

How elections upend economics is evident in the just-passed budget of Maharashtra. Recollect that last year just before the Assembly elections, the ruling alliance passed the Ladki Bahin scheme giving ₹1,500 to women between the ages of 21 and 65. It was the trump card that returned them to power but drove a massive hole in the finances of the state. The new government trying to bring in stability was evident in what the budget did not contain. It had no new big-ticket schemes. The promise of increasing the Ladki Bahin amount to ₹2,100 was postponed to the future. And this despite setting aside ₹36,000 crore for it. No farm loan waiver as promised before the elections also made it to the budget.

Maharashtra still spends about ₹1.3 lakh crore more than it makes. The Ladki Bahin scheme's outlay is more than one-fourth of that amount. It shows the scale of what a dole like that involves

All this is good because there was always the other option of continuing with the populism and forgetting about prudence, some­thing some states have done earlier and then paid a hefty price for it. Altogether, Maharashtra still spends about ₹1.3 lakh crore more than it makes. The Ladki Bahin scheme's outlay is more than one-fourth of that amount. It shows the scale of what the dole involves. On top of that, it has been found to be availed by a large number of women who were not eligible but that was ignored earlier because everyone who got it became a potential voter. Now, an exercise to prune such recipients is ongoing because without an election for five years, the negative fallout can be absorbed.

Even for such a deficit, the state has had to scramble for new lines of earnings, like increasing tax on CNG, LPG and high-value electric vehicles, or a hike in stamp duty. Elections are paradoxical in that they are the foundations of a democracy but also the mechanism whose imperatives lead to corruption and populism. A country or a state can still thrive so long as these forces are contained but it doesn't take much for it to become unmanageable.