Freebie Fix

IT IS ELECTION time and a rain of sops has been prom­ised by political parties across the five states that will go to polls next month. From gold to an IPL team and from farm loan waivers to cash bonanzas, parties are outbid­ding each other to deliver a cornucopia to voters. There is not a whit of consideration about the costs, let alone fears about the economic future of these states that will end up spending gigantic sums to meet these promises.

In Madhya Pradesh, a battle of wits is on in the political landscape. In mid-October, Congress released its manifesto for the state that literally included “everything for everyone”. The Bharatiya Janata Party (BJP), which has not released its docu­ment so far, has a contrasting approach. Instead of waiting to make a slew of announcements at one-go on election eve, the Shivraj Singh Chouhan government has spread such announce­ments over the past eight months.

The pride of place in the Congress document is reserved for farmers, probably the most important constituency from that party’s perspective. The party has promised that if it secures a victory in the state it will waive agricultural loans up to ₹2 lakh for farmers. In addition, it has promised free electricity and water for the sector. Under the Kisan Nyay Yojana, wheat will be procured at ₹2,600 per quintal and rice at ₹2,500 per quintal. Farmers will also be given an insurance cover of ₹25 lakh along with a cover of Rs 10 lakh as accident insurance cover.

The party has also promised that suitable steps will be taken to ensure criminal proceedings against farmers who had partici­pated in protests against the farm laws are dropped. Further, in cases of pending loans, it will be ensured that no coercive steps are taken to recover such loans.

Congress has also promised to conduct a caste census in the state and the same promise has been made by the party in poll-bound Chhattisgarh where party leader Priyanka Gandhi made the promise at a rally in Kanker on October 7. Just around the same time, the Congress-led government in Rajasthan notified that such a census would be undertaken in the state which is also going to polls later in November.

As can be expected, BJP has unrolled its populist strategy over the past many months. In May, Shivraj Singh Chouhan pre-empted the key Congress promise of waiving farmers’ loans by launching the Mukhyamantri Krishak Byaaj Maafi Yojana, or the chief minister’s interest waiver scheme, 2023. Eleven lakh farmers are expected to benefit from it. The scheme holds out a hand for farmers who have defaulted on loans of up to ₹2 lakh borrowed from Primary Agricultural Cooperative Soci­eties (PACS) and includes both the principal amount and the interest till March 31, 2023.

Launching the scheme from Sagar in the state, Chouhan has mounted a blistering attack on Congress which he said had done a poor job of its promise to waive loans within 10 days of coming to power. He said, “They (Congress’ government) announced that they would waive loans for farmers within ten days but they waived only ₹6,000 crore out of ₹48,000 crore in 1.25 years.”

Earlier, in January, the state government launched the Ladli Behna Yojana that gave a monthly financial assistance of ₹1,000 to eligible women in the state. Later, just before Rakshabandhan in August, the quantum of this assistance was raised to ₹1,250 per month. The Ladli Behna Yojana is now the nucleus of a set of schemes for women. While announcing the increase, Chouhan also announced that the amount of reservation for women in government jobs would go up from 30 to 35 per cent. This figure is already 50 per cent for the recruitment of teachers. Then, he also announced LPG cylinders for women beneficiaries at ₹450 per cylinder.

In addition, the chief minister announced land and industrial plots for women in industrial estates to open smallscale units. Land would also be provided for women in cities and villages for residential purposes. Congress, in turn, has made similar—and more extensive—promises to women in its manifesto.

It is interesting to see the contrasting approaches of BJP and Congress in making these populist promises. While BJP has timed the spread of these schemes—as can be expected from a ruling party—Congress, as the challenger, has had to make its promises at one-go.

THESE POPULIST PARALLELS on the part of Congress extend beyond Madhya Pradesh. In Chhattisgarh, the same—equally expensive—promise to waive farmers’ loans has been made once again by the party. In 2018, on the eve of elections, Congress had promised to waive farmers’ loans if it was voted to power and the same promise has been repeated now. Chief Minister Bhupesh Baghel made the promise recently during a visit to the Sakti constituency in Sakti district.

There, Baghel justified his approach by contrasting the al­leged loan-waivers given to industrialists by the Centre with waivers for farmers from his government. He said that “the money that goes into the pocket of a farmer comes back again in the system while the same does not happen when you give money to big industrialists.”

“When we waived farmers’ loans, it brought positive change in the lives of farmers and traders,” he added.

Other promises made by the chief minister include a caste census for OBCs in the state, and setting up a CM Awas Yojana to provide homes to the poor. Interestingly, Chhattisgarh showed a lukewarm attitude towards making use of the PM Awas Yo­jana (PMAY) while BJP has said that if it is voted to power, it will implement PMAY. Baghel also promised a free bus service for students. He also announced an increase in the amount of rice to be procured from farmers, from 15 quintals per acre to 20 quintals per acre.

Congress and BJP, however, have not released their manifestos in the state. In contrast to Congress, BJP has been much more restrained in making populist announcements in all states but especially in Chhattisgarh and Rajasthan.

Of all the states going to polls, Rajasthan has the weakest fiscal constitution. Apart from all the sops announced by the Gehlot government, it is the reversion to ops that is a ticking time bomb for the state

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In Rajasthan, the ruling Congress has kept populist taps open for the past year although it is yet to announce its manifesto for the coming polls. BJP, too, is yet to make its announcement. The first salvo was fired more than a year ago when the state govern­ment notified the restoration of the Old Pension Scheme (OPS) last May. Since then there has been no looking back. The Ashok Gehlot government has offered pensions to the elderly that range up to ₹1,000 per month. In June this year he announced a 30 per cent concession for women travelling on state roadways buses. This is over and above sops like free electricity of up to 100 units, LPG cylinders priced at ₹500, and a host of other freebies.

Of all the states going to polls, Rajasthan has the weakest fiscal constitution. After Punjab, West Bengal and Kerala, Rajasthan is among the most financially distressed states. Apart from all the sops announced by the Gehlot gov­ernment, it is the reversion to OPS that is a ticking time bomb for the state. Given its five-year revolving door politics, this is akin to a scorched-earth politics. At some point, a government that is geared towards building the state’s infrastructure will find itself between a rock and a hard place.

It is worth noting that Rajasthan’s debt has ballooned from just over ₹3.11 lakh crore to ₹5.37 lakh crore within five years from 2018-19 to 2022-23. As a percentage of GSDP, these outstand­ing liabilities will continue to hover around 36.6 per cent to 36.8 per cent (2022-23 to 2023-24). These elevated levels are likely to take a toll on the state’s financial health over time unless the bal­ance is shifted towards more productive spending of resources. Even if a reformist government comes to power, it will have to find its room for manoeuvre over time.

MUCH OF THIS populist and counter-populist thrust by the opposition and the ruling party can be seen in Telangana that goes to polls last in the current cycle. While Congress’ manifesto is yet to be released, a slew of prom­ises was made by party leader Sonia Gandhi in September. These “six guarantees” were modelled on the party’s experience in Karnataka. Under the Mahalakshmi scheme, ₹2,500 has been promised to women. Gas cylinders priced at ₹500 and free rides across the state on state road transport corporation buses have also been promised.

Earlier this month, Sridhar Babu, chairman of the Telangana Congress Manifesto Committee, added another ‘attraction’ to the promises made under the Mahalakshmi scheme. He said discus­sions were being undertaken in the state and within national party organs for providing 10gm gold to eligible girls on marriage. This was in addition to the existing commitment to provide ₹1 lakh to the bride’s family through the Mahalakshmi scheme. This is yet to be declared formally by the party.

The other five ‘guarantees’ include the Rythu Bharosa scheme—farmers and tenant farmers receive ₹15,000 annu­ally—and agricultural labourers to get ₹12,000 per annum. In addition, a bonus of ₹500 will be given for the rice crop. Under the Gruha Jyothi guarantee, eligible households will be given 200 units of electricity free. The Indiramma Indlu scheme promises to allot housing sites and ₹5 lakh for those without a home. In addition, a 250 sq yard plot will be given to all Telangana move­ment freedom fighters. Under Yuva Vikasam, students will receive Vidya Bharosa Cards worth ₹5 lakh and Telangana In­ternational Schools will be established in every mandal. Under Cheyutha, a monthly pension of ₹4,000 for the elderly and ₹10 lakh as insurance cover has been promised.

As seen in other states, incumbent K Chandrashekar Rao (KCR) has not waited till the eve of polls to announce populist measures. Earlier this year, on Independence Day, the state government waived farmers’ loans of up to ₹1 lakh, a step likely to benefit more than nine lakh farmers. Farmers are a particularly important elec­toral segment in the state and the KCR government is mindful of being seen on the right side of this powerful lobby.

The elephant in the fiscal room in all of this is, of course, the bill that will accrue for such populism across the poll-bound states. No party wants to talk about it, even if it is understood that the short and long-run costs cannot but be very stiff.

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Siddharth Singh

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