Welfare Wins

THERE ARE MANY reasons for the Bharatiya Janata Party (BJP)-led Mahayuti alliance’s victory in Maharashtra, securing a three-fourths major­ity in the 288-member Assembly. But among the plethora of reasons, one subset holds special sig­nificance: the welfare outreach of the Mahayuti government. From women to the poor and from the subaltern to the underprivileged, all demographics voted for the coalition. The data speaks for itself. The post-poll survey conducted by the Centre for the Study of Developing Societies (CSDS) in the state showed that 39 per cent women voted for Mahayuti while 27 per cent voted for the Opposition Maha Vikas Aghadi (MVA) alliance, a differ­ence of 12 percentage points. The rural-urban gap between the two alliances was 14 percentage points in favour of Mahayuti. The same story was repeated across Maharashtra’s six regions with the exception of Konkan where the skew was in favour of MVA. In terms of economic classes, all classes—from the poor to the rich—voted for Mahayuti. The voting percentage gap across every classification was in favour of the BJP-led coalition.

Behind this impressive victory the role of welfare schemes is visible and beyond doubt. Consider the cash transfer scheme—the Majhi Ladki Bahin Yojana—that was announced towards the end of June, some two weeks after BJP’s poor performance in the Lok Sabha polls. The scheme promised a transfer of ₹1,500 per month to eligible women along with three free LPG cyl­inders annually. By November, some 2.34 crore women had benefited from the scheme. Before polling took place on November 20, all beneficia­ries had received ₹7,500 in their accounts. It was not surprising that the CSDS survey found that 54 per cent of women who had applied for the scheme voted for Mahayuti. This percentage was 55 per cent in rural areas with the gap between the two alliances being as high as 23 percentage points in rural areas. Of the women surveyed, 83 per cent had applied for the scheme.

This scheme, however, is not the only one that made Mahayuti’s fortunes. Between June and October, 91.5 lakh farmers received two instalments of the PM-Kisan scheme, totalling ₹12,000. When the amount received under the Ladki Bahin Yojana is added, this sum tallies to an impressive ₹19,500 for a large number of families. But these sums would be an understate­ment. A recent research report by Axis Bank shows that in Maharashtra the bottom 10 per cent of the households received an expenditure boost of 20 per cent or more from such schemes. When other benefits such as the free foodgrains programme, the health insurance scheme (PM-JAY), etc are added to the basket of welfare measures availed by the poor, that represents a lifeline of sorts to most households in rural India and especially in states like Maharashtra.

It is interesting to note that Congress promised to double the monthly assistance to women, to ₹3,000, apart from loan waiv­ers for farmers up to ₹3 lakh and a slew of other schemes, such as free bus rides for women. That did not go anywhere and the party posted its worst-ever performance in the Assembly elec­tions, winning just 16 seats. In 2019, it won 44 seats. Clearly, the voters of Maharashtra did not think the promises were credible.

THE SITUATION IN the months after the drubbing received by BJP in the Lok Sabha elections was considered unpropitious for its chances in the Assembly elections. There were multiple problems for Mahayuti. For one, there was anger among Marathas for not getting affirmative action, a demand that had been made for years. Activists like Manoj Jarange Patil fished in troubled waters. Then, there was anger among farmers in Vidarbha about low realisation prices for crops like soybean.

These problems were sorted out systematically by providing welfare benefits to households to ensure that they did not enter a zone of distress that would be politically expensive for the rul­ing coalition. Managing this required not just promising doles but ensuring benefits reached the intended people while not straining the state’s finances beyond a point. There were other factors at work in ensuring Mahayuti’s return but welfare measures played a big role in the favourable political outcome.

There are differing perspectives on the rationale and sustain­ability of these schemes. Economically, it makes sense to give handouts to households that are at the bottom two to four deciles of consumption expenditures. (A decile in this case is defined as each of 10 equal groups into which a population can be divided according to the distribution of monthly per capita consumption expenditure or MPCE.) According to the 2022-23 Survey on House­hold Consumption Expenditure (HCES) that was released earlier this year, in Maharashtra and Jharkhand, the bottom 10 per cent of the rural population in terms of consumption expenditure spent ₹1,938 and ₹1,422 per month. The all-India median consumption expenditure per month was ₹3,286 in rural areas. There could not be a more pressing argument in favour of transferring money to such households. Incidentally, the case for transferring such sums is much stronger for Maharashtra and Jharkhand as compared to Karnataka where the bottom decile is slightly better off. This is also the case for Haryana, another state that held Assembly elec­tions recently and where BJP, which won elections there for a third consecutive time, did not offer the equivalent of a Majhi Ladki Bahin Yojna. As it happens, the HCES data shows that Madhya Pradesh, a pioneering state where such a scheme was launched by former Chief Minister Shivraj Singh Chouhan, too, has the lowest decile with a low MPCE. The economic case for helping such households is, thus, clear.

The situation in the months after the Lok Sabha polls was considered unpropitious for BJP’s chances in the Maharashtra assembly polls. There were multiple problems for Mahayuti, which were sorted out systematically by providing welfare benefits to households

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Private sector economists concur with this outlook. A recent Axis Bank research report said: “These schemes affect around 34% (average) of women in the target states. Assuming efficient target­ing (i.e. only the bottom 34% get it), the boost in household expen­diture could be 5-45%, with the bottom 10% in Jharkhand seeing the largest percentage boost. The first decile in Telangana, Maha­rashtra, and Karnataka would also see a greater than 20% increase. As urban spending across deciles tends to be higher than rural, the incremental impact may be higher in rural areas. The categories seeing stronger incremental demand may be food, conveyance, durable goods and health.”

These expenditures have seen a jump from close to zero per cent in 2020 to an expected 0.6 per cent of GDP in 2025 for a group of states that includes Andhra Pradesh, Assam, West Bengal, Karnataka, Madhya Pradesh, Tamil Nadu, Telangana, Him­achal Pradesh, Delhi, Maharashtra, Odisha, and Jharkhand. Some economists argue that this figure could be as high as 1 per cent of GDP. When other items such as PM-Kisan, PM-GKAY, MGNREGS and other benefits are added, this figure easily crosses 2 per cent of GDP.

These are vast sums of money even as there is a pressing case to help such households, especially those at the bottom of the consumption pyramid. But as always the question is one of sustainability. Some states, Karnataka and Himachal Pradesh are examples, have not been able to manage such schemes well, keeping in mind other economic priorities (for example expendi­ture on development works that include infrastructure). Himachal came to such dire straits that it could not pay salaries to its of­ficials on time recently. It also got into legal trouble when a court ordered the attachment of its property in New Delhi. Jharkhand has had its own share of troubles. All these states are ruled by Opposition parties.

Maharashtra, so far, has not run into fi­nancial difficulties of the sort that Karnataka or Himachal Pradesh has. But welfare mea­sures are expensive. The Ladki Bahin Yojana is expected to cost a tidy ₹33,000 crore from July 2024 to March 2025. Maharashtra’s debt burden is expected to be ₹7.8 lakh crore in 2024- 25. During the heat of the election campaign, a promise was made to increase the payout in the Ladki Bahin scheme from ₹1,500 per month to ₹2,100 per month. But no sooner than the results were declared, reports began to appear that this might not happen. Critics will say that this was a “false promise”. But for a change, the priorities have reversed: instead of doing what is politically desirable but economically not-so-desirable, Maharashtra may go for what is economically feasible.

In the days after the results were declared, some commenta­tors began asking whether India was moving into some form of a Universal Basic Income (UBI) system. That proposal is the darling of economists who feel that a lump sum transfer of money to all households would be less distortionary in economic terms as com­pared to a raft of welfare schemes that only end up burdening the exchequer. But while appealing, the idea is politically unfeasible. For one, going to a UBI system where a household is given, say, ₹10,000 per month will require an end to most welfare schemes. Without doing that, there is no way a UBI programme can be sustained. For another, the political system is geared towards “mak­ing promises and delivering them” instead of enabling people to do what they want. This is a pernicious legacy of India’s tryst with socialism and cannot be undone for the foreseeable future. There is a third problem as well: if the government ceased to be a supplier of goods and services to citi­zens at the bottom of the economic pyramid, these services might not be within the reach of the poor. The private sector can provide these goods and services but even with a UBI, the poor may not be able to get the bundle they need.

What the Maharashtra experience shows is that a carefully designed set of schemes, their proper implementation and a hawk-like watch over finances is the way ahead.

About The Author

Siddharth Singh

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