Madhya Pradesh Polls: Parties must duck politics of freebies

Civil society must devise mechanisms to probe political parties on financing of the promises falling in the category of freebies and must see that the key priority areas don’t see budgetary cuts.

After Karnataka, Madhya Pradesh is bracing up for politics of freebies. Political parties are warming up in the state to cajole the people with their versions of welfarism. From free electricity to cash-in-hand promises, Madhya Pradesh is setting up an electoral contest to test the limits of politics of freebies. There must absolutely be no doubt that freebies come at a cost, for not just the future generations but even for the youth of today. Perils of freebies are visible in several examples, such as Punjab, which despite being the torchbearer of India’s green revolution is now grappling with high debts. Also, the expenditure to cover the cost of freebies comes only at the expense of several propriety sector expenses facing cuts.

But the harsh reality of the day indeed is that Madhya Pradesh is now a turf for competitive freebies. This must disappoint all, for the Centre had hosted at least two rounds of extensive brainstorming with the state chief secretaries in the wake of the report of the Reserve Bank of India on the rising debts of the states. The overall aim during the deliberations was to discourage the states from chasing populism. It was even top on the agenda of the last Governing Council meeting of NITI Aayog.

Freebies For Votes

Yet, there appear no gains on the ground. The Congress has hit the ground running in Madhya Pradesh with five guarantees — unemployment allowances for graduates and diploma holders, cash transfer for women (Rs 1,500 monthly), LPG cylinders at Rs 500 each, implementation of the old pension scheme, subsidised electricity and farm loans waiver. The ruling BJP is banking on the ‘Ladli Behna Yojana’ under which women above 23 years of age get Rs 1,000 a month in their accounts. Chief Minister Shivraj Singh Chouhan has said that the entry age will be lowered to 21 years and monthly bank account transfers would be raised in a staggered manner to Rs 3,000 a month.

While Madhya Pradesh politically is the turf for a straight contest between the BJP and the Congress, the Aam Aadmi Party is also entering the fray with an aggressive pitch for freebies. The promise to restore the old pension scheme in itself is worrisome. Madhya Pradesh currently has a pension liability of Rs 23,011 crore, which according to a research report of the PRS Legislative will reach Rs 69,062 crore in 2030-31. The report underlines that the state’s committed expenditure, including expenses on payment of salaries, pensions, and interest, jumped from 32 percent of revenue receipts to 42 percent during 2016-17 and 2021-22.

At the same time, Madhya Pradesh is not among the states that are growing at a speed that there could be miraculous growth in own revenues to bear the cost of the competitive politics of freebies. The RBI report of the last year on the risk to the finances of states noted that Madhya Pradesh was already committing 1.6 percent of the state GDP to finance freebies. Besides, the RBI also has said that Madhya Pradesh will need to allocate 3.9 percent of the state gross domestic product to bail out the power distribution companies (discoms). If competitive politics of freebies add to the burden on the state to commit higher resources for the discoms, Madhya Pradesh may see reduced availability of funds for key areas which address livelihoods such as job creation, attracting investments, boosting nutrition, improving quality and coverage of education, speeding up the creation of storage and market linkage facilities for farmers to help them gain remunerative prices for their produces, etc.

Avoiding The Trap

Freebies may push the state into fiscal troubles. The fiscal deficit for 2023-24 has been pegged at Rs 55,708 crore, which is four percent of GSDP against the 3.5 percent ceiling set by the Fiscal Responsibility and Budget Management (FRBM) Act. The state has budgeted for only a minor revenue surplus of Rs 413 crore in 2023-24 against the total revenue receipt of Rs 2,25,710 crore, 55 percent of which were resources transferred from the Centre (36 percent share in taxes and 20 percent grants). While the RBI report on states with high debts had not listed Madhya Pradesh in the distressed club, freebies could push the state into that avoidable trap.

Equally significant is the fact Madhya Pradesh has seen near-stagnant budgetary allocations for rural development, water and sanitation, irrigation and flood control, police and transport in recent years. Indeed, freebies should be compensated by efforts backed with budgetary allocations which boost incomes and cut down the out-of-pocket expenses on health and education.

The silver lining for Madhya Pradesh is the current focus on education, with almost 16 percent of expenditure in the 2023-24 Budget earmarked for it. Also, the state was praised by NITI Aayog in its multi-dimensional poverty index for the second fastest reduction in poverty, from 36.57 per cent in 2015-16 to 20.63 per cent in 2019-20. The achievement was made possible, according to NITI Aayog, because of the skilling of the people and the availability of livelihoods opportunity.

Yet, roughly one-fifth of the people in Madhya Pradesh are without access to drinking water. Rapid skilling of the youth to help them find gainful employment will require enhanced focus on the creation of technical training infrastructure. This may stem the issue of migration, which again is a key concern for Madhya Pradesh.

People may not mind state governments giving them free electricity and water, and many more doles. They may not have the inclination or ability to look into the future to make a deeper analysis. This calls for an institutional intervention wherein Parliament by law forbids political parties from making promises of giving electricity for free and also waiving off loans of any kind. At the same time, the Election Commission too must step in to stem the rot with adequate measures by spelling out the specifics which may invite classifications as voters’ allurements and thus be forbidden. Civil society too must devise mechanisms to probe political parties on financing of the promises falling in the category of freebies and must see that the key priority areas don’t see budgetary cuts. 

Manish Anand is a Delhi-based journalist. Views are personal, and do not represent the stand of this publication.