Freebies: Short-term political gain may become long-term economic distress, says Report

New Delhi [India], February 10 (ANI): Once just campaign promises, political freebies have now become a crucial strategy for winning elections in India.
A report by Aequitas Investments highlights how political parties are increasingly relying on freebies in the name of welfare schemes to secure votes, often at the cost of state finances.
"As political parties compete in what appears to be a race to the bottom, welfare schemes and "freebies" have evolved from mere campaign promises to the new currency of political power," it says.
The report highlights that as the race for political power intensifies, the challenge will be to ensure that short-term political gains do not lead to long-term economic distress.
It says the 2024 general elections marked a significant shift in the country's fiscal policies. State elections further demonstrated how political parties are competing in a "race to the bottom," offering more and more freebies to outdo each other.
These welfare schemes, though beneficial for citizens in the short term, pose serious financial risks for states in the long run says the report.
Take Karnataka as an example. After the Congress party's victory in the state elections, it introduced several costly welfare schemes. The Gruha Lakshmi scheme, which provides Rs 2,000 per month to women, and the Gruha Jyoti scheme, which offers 200 units of free electricity, have together led to an expenditure of about Rs 52,000 crore.
This amount accounts for 78 per cent of the state's fiscal deficit for 2023-24, raising concerns about Karnataka's financial stability. In contrast, the BJP's planned welfare spending in the state was only Rs 2100 crore, or just 3 per cent of the deficit.
This trend is not limited to Karnataka. Other states have followed suit, announcing their costly welfare programs:
Maharashtra launched schemes such as the "Ladli Behna Yojana," abolition of toll charges on state highways, farm loan waivers, and free healthcare, costing Rs 44,000 crore annually.
Uttar Pradesh committed Rs 36,000 crore to women's pensions and old-age welfare programs.
Bihar introduced a 75 per cent reservation policy in jobs and educational institutions. Delhi expanded power subsidies, allowing 2.2 million households to receive zero electricity bills. Recently held elections in Delhi promises Rs 2100-2500 to all women above the age of 18 years, in addition to already given free bus travel to women of Delhi.
The financial strain of these policies is becoming evident. Delhi has sought a loan of Rs 10,000 crore from the National Small Savings Fund (NSSF) for 2024-25, despite opposition from its own finance department.
Similarly, Punjab, Himachal Pradesh, and Karnataka are struggling to even pay salaries to government employees.
The report draws a comparison with Brazil's Bolsa Familia program, which started in 2003 with a target of financial aid to 3.6 million families. By 2020, the scheme expanded to 14.1 million families, significantly reducing poverty but also contributing to the country's economic difficulties. (ANI)