GhoseSpot | Competitive populism: India's electoral politics, freebies and fiscal concerns

The Karnataka Assembly Elections are now done and dusted. The results have been analysed to death. It has added a new spring in the feet of Congressmen. And, they can barely conceal their excitement. The renewed confidence was evident in their recalcitrant stand on the opening of the new parliament building. It is being amplified in the speeches of Rahul Gandhi on his just commenced tour of the United States of America. Many factors have been attributed to the party’s performance that surpassed the expectations of pollsters and political observers – the primary one being the “Five Guarantees” to the electorate. These included 200 units of free electricity per month to every household, ₹2,000 every month to every woman head of a family, 10kg of rice every month to every member of BPL family, 3,000 dole to unemployed graduates, Free travel for women in ordinary public transport buses across Karnataka. Post poll surveys indicate a major swing among the economically weaker section towards the Congress. Thus, obviously, the lure of sops worked in its favour. A similar trend was observed earlier in Himachal Pradesh where Congress pipped BJP to the post. There too Congress made a number of populist promises. The primary one being reverting to the old pension scheme which struck a chord among the large population of retired government employees in the state. Similarly, the Aam Aadmi Party’s phenomenal performance in Punjab was based on its Delhi template of freebies. Interestingly, in Karnataka, the Bharatiya Janata Party (BJP) which has been decrying the culture of freebies that the prime minister famously called “Rewadis” (candies), buckled under pressure and made counter offers of three free gas-cylinders and half-a-litre of milk. Even in Himachal Pradesh it had talked of providing 125 units of free electricity against Congress’ pledge of 200 units. Thus in a way it may be said that all political parties are equal opportunity offenders when it comes to electoral populism. The problem is of course the cost to the exchequer. The 5 Guarantees of the Congress in Karnataka, if implemented, is estimated to cost the state exchequer over Rs 50,000 crore. This would amount to around 22 per cent of the state’s total revenue receipts. This may not look alarming at face-value because Karnataka’s fiscal position is relatively better than many states. However, the situation is not so hunky-dory in all states. Telangana, for example, has committed nearly 35 per cent of its revenue receipts to populist schemes. The Congress has already indicated that having tasted success in Karnataka it is going to replicate the template in other large states like Madhya Pradesh and Rajasthan that are coming up for polls later this year. This will no doubt trigger a new cycle of competitive populism. The implications of such fiscal profligacy are worrying. Many of our states are deep in debt. The national average of liabilities of states is as high as 31 per cent of their total GSDP (Gross State Domestic Product). A large part of state revenue earnings is spent in servicing debts. In the case of some large states like Punjab, West Bengal, Kerala the figure is above 20 per cent. Simultaneously, the revenue receipts of most states have been falling as a percentage of GSDP. This creates a financial situation that is untenable in the long run. However, this is not likely to stop with the states. It will be safe to assume that having failed to market its idea of an universal basic income NYAY (Nyuntam Aay Yojana) in the 2019 Lok Sabha elections the Congress will relaunch it again with a new packaging. That might force the BJPs hands to come up with something even more attractive, taking us back down the road of socialist economic policies from the path of reforms the country had embarked upon. The political roots of such a policy U-turn lies in the belief that the BJP has been the beneficiary of Direct Benefit Transfer (DBT) schemes for the weaker sections of the society, especially during the pandemic. This created for BJP a “labharthi” (beneficiaries) constituency that the opposition is trying to break into. It has been argued that the DBT schemes served the country well in tiding through the Covid Crisis when the prospects of food scarcity were real. But having navigated through the troubled waters, in which India fared better than most large economies around the world, it was time for us to move towards fiscal consolidation and usher in the next wave of reforms. A return to the socialist era will be retrograde at this juncture. The counter argument to this is when basic survival is in question the future can wait. However, to make it a binary proposition would be a mistake. Here is where targeted welfare programmes in which the last mile delivery is ensured through DBT becomes important. It also allows focussed intervention over blanket schemes such as free bus which are prone to wastage and misuse. The need of the hour is capacity creation - which for example means skill development rather than providing unemployment doles that will further breed an aversion to work, as already seen in several parts of the country that were spoiled by sops. Often the choice is stark between building social infrastructure such as rural schools and public healthcare over vote catching vows that are seldom fulfilled. The world is talking of India’s demographic dividend. The way to encash it is by empowering the youth with relevant skills (not necessarily text book education) to take advantage of the opportunities that are knocking at the country’s doors due to the changing geo-politics and readjustment of global economic power equations. The path of reforms is always painful. The job of the government is to hold the hands of the people through this difficult journey and not distributing candies or administering placebo. The second is a slippery slope. Though India may not go the way of Sri Lanka, it can set us back by several years. The Narendra Modi government must find creative means of meeting people’s aspirations without walking into the trap of populist politics. That is what the nation would expect of a visionary leader. The author is a current affairs commentator, marketer, blogger and leadership coach, who tweets at @SandipGhose. Views expressed are personal. Read all the Latest News , Trending News , Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.