Income disparity, poverty and aridity are reducing, but freebie politics is rising in Bharat. Why? Developed markets like the US and the UK got into a freebie spree to sail through the pandemic and the repercussions are calamitous!
On the domestic front, Himachal Pradesh, then Karnataka moved away from development and got into give-out electioneering; any lessons for Telangana where the battle has just begun to gain lost ground?
One of the famous Sanskrit shlokas talks about efforts and their resultant events:
उद्यमेन हि सिद्ध्यन्ति कार्यानि न मनोरथै: !
न हि सिंहस्य सुप्तस्य प्रविशन्ति मुखे मृगा:.!!
Meaning: The work, the task, the endeavours are only successful through enterprise, efforts and attempts and not through desires. The same way as a deer or the prey does not enter the sleeping lion’s mouth by itself.
Hunter Becomes Hunted
This Shloka was quoted, coined and stated in Satyuga, when there was no trickery and treachery. In the present Kalayug, where there are no free lunches, this ‘Shloka’ can be extended by stating that if the prey enters the mouth of the sleeping lion, then the lion is about to become the prey of the one who is feeding the sleeping lion.
In simpler words, when a trap is being woven, a playground is set, an arena is being prepared, the intent is clear, the hunter, who has the power of the ballot (in this context the poor populace of the state)
is about to get hunted.
Sanatani Versus Nepotistic Neta
Politics knows no limits, as politics brings immense power, the power that people willingly or unwillingly, coercively or cajolingly, fearfully or enticingly give to politicians. The unfortunate cliffhanger is that the democratic system only focuses on the outcome and forgets the process that may be broken, butchered or busted in the zeal of attaining the ballot. Political tools, by and large, can be divided into three formats to grab power, beyond the obvious one that has existed in Bharat for over 3,000 years and that formed the bedrock of all rulers, who ruled and prevailed with good governance in its various States as per values of Santan Dharma.
The highest level of Karma and Dharma ensures socio, economic, mental and physical advancement and development of the State with a single focus to strengthen the Rashtra (encompasses both the boundaries and the people). In the process, the populace of the Nation would want them to get elected and re-elected again and again as they have put the interest of the masses first before their personal or family interest. On the other side of the spectrum lies the high-handed, feudal, nepotistic politicians who believe that there are broadly three formulas to rule, grab power, and maintain the regime.
The Himachal Story
Himachal Pradesh, one of the hilly Northern states of Bharat, is known for its hardworking, spiritually-oriented and culturally progressive people. After years of mismanagement in 2017, the ruling Congress was ousted from power. The new Government-led by the BJP did phenomenal developmental work by constructing railway lines, connecting the State seamlessly with the rest of the country and building leading educational institutions including hydro-engineering colleges as well as roads, bridges and highways.
In 2022 to regain the State, Congress promised:
- Free electricity up to 300 units per household in the State Rs 1,500 per month to every woman in the State between 18 to 60 years
- Purchase of cow dung at Rs 2 a kg, and re-initiated Old Pension scheme to appease retired Government pensioners and put pressure on the state exchequer
Thanks to free guarantees and promises, Congress came into power in 2022 and the State’s fiscal math since then has gone for a toss.
In Dec 2017, when the BJP overthrew the Congress in Assembly elections both growth and fiscal discipline were brought in. Between FY18 and FY22, the Gross State Domestic Product of Himachal at current prices grew 7.3 per cent per annum and the Government of Himachal was able to manage fiscal prudence by having the fiscal deficit within the parameters of the FRBM (Fiscal Responsibility and Budget Management) Act of three per cent.
In FY 2018, the fiscal deficit of Himachal stood at 2.79 per cent. However, it slipped to 3.62 per cent during COVID-19 in FY 21 but recovered sharply to 2.99 per cent in FY 2022, to comply with the FRBM act of sub three per cent.
Post-2022 elections, Congress took charge and got the State into a debt trap, where the Government of Himachal didn’t have enough resources to pay the interest on the State debt, but freebie politics continued.
Congress maintained free dole-outs and Himachal Pradesh Government’s fiscal deficit for Financial year 2023 jumped to nearly double of previous year’s 6.5 per cent. As of March 2023, the Government of Himachal had debt over Rs 75,000 crores and freebies have only added to the pressure on the State with no cash for salaries and pensions to be paid out and virtually no money for any development project. The Karnataka Story
Another State that went into elections recently was Karnataka, where the incumbent Government lost the majority despite doing developmental work to the freebie politics and the result is visible in a matter of weeks and not months.
A month before the election code of conduct was implemented, the sitting Karnataka BJP led Government in Feb 2023, presented the State Assembly a revenue surplus budget for FY 24, with an annual revenue outlay of over Rs 3 lakh crores, a first in Karnataka’s history as well as maintaining the fiscal discipline as per the FRBM ACT of under three per cent, that stood at 2.60 per cent.
To reverse the work of the incumbent Government, hollow promises and free guarantees were made in the Congress manifesto to fight the 2023 Karnataka State Assembly elections.
Promises that were made are listed below:
- Rs 2,000 monthly assistance to women heads of all families
- 200 units of power to all households
- Rs 3,000 every month for graduate youth and Rs 1,500 for diploma holders, 10 kg rice per person per month and free travel for women in the State public transport buses
The total cost of all the freebies was estimated to be Rs 65,082 crores a year, as per various analysts. The new freebie expense is tantamount to nearly 20 per cent of the State budget. Free doles worked and Congress gained power and immediately after winning, all the development projects were put on hold. The new Deputy CM of Karnataka instructed all the winning MLAs that in FY 24, Karnataka will spend no funds for growth and development since the freebies promise needs to be met, which will increase the fiscal deficit from a projected 2.6 per cent to 6 per cent.
Story of the United States
In the US, as a result of COVID-19 breakout in 2020, the US progressed swiftly to fix the demand side problem and got involved in cash dole-outs. The stimulus was through direct physical cash dole-outs. In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was implemented, providing economic impact payments of up to USD 1,200 per adult for eligible individuals and USD 500 per qualifying child under the age of 17 in the United States.
Delhi was once a hugely profitable Union Territory with a surplus budget. However, in FY 24, it is staring at a fiscal deficit of Rs 10,386 crores
On top of it, up to USD 500 per month was handed over for three months to employees, who were facing salary loss for at least three consecutive months, with an average overall loss of at least 50 per cent. The results are visible causing a double whammy of higher inflation and higher interest burden. Inflation jumped to 9.1 per cent in June 2022, the highest since November 1981. Causing quick and massive interest rate hikes, crushing the economy as well as burdening the common American under the dead weight of hiked EMIs yet the inflation fails to meet the Fed’s target of sub two per cent. Freebie politics started with Delhi, spread to Punjab, migrated to Himachal, engulfed Karnataka and is now threatening Telangana.
Delhi was once a hugely profitable Union Territory with a surplus budget. However, in FY 24, it is staring at a fiscal deficit of Rs 10,386 crores, which is more than twice the revised estimates for 2022-23 which stood at Rs 4,359 crores. Four States in Bharat – Manipur, Nagaland, Punjab and Arunachal Pradesh – have high levels of debt. Of these, Punjab is particularly alarming as it has the highest size (amongst all four) of the budget as well and it is pressured on all financial scores – debt ratio (Debt to GSDP touching 50 per cent), fiscal deficit (5.3 per cent of GSDP in FY 23), guarantees and debt servicing. Manipur and Arunachal have high debt-to-GSDP ratios but are comfortable with the servicing aspect. Himachal Pradesh remains quite vulnerable as the debt servicing ratio is high and can get into a debt trap.
Upcoming Telangana Story
Since the formation of the State in June 2014, Telangana Rashtra Samiti or TRS has been ruling the State. The irony is that the Central Government that approved the formation of the State led by Congress could never make its mark in the local Telangana politics. This time, as the last resort to dent the vote bank of TRS, Congress has resorted to the most vicious trick of freebie politics.
Promises Guaranteed by Cong
- Rs 2,500 monthly financial assistance to women in Telangana
- Gas cylinders at Rs 500
- Free travel for women in TSRTC transport buses across the State
- 200 units of free electricity to each poor household
- A plot of land and Rs 5 lakhs to families without a house
Tale With A Twist
The freebie list is long and can be read from the Congress manifesto. To top it all, the most interesting guarantee is the one given to Statehood activists, who fought to divide Andhra Pradesh into Telangana and they would be given 250 square yards to build the house. The Congress’s unanointed chief’s mother-in-law crushed the separate statehood demand and movement in 1969 and broke all top leaders of the Telangana agitation to bring them back into Congress. Now the same Congress is promoting and rewarding the ones who were behind the Telangana State creation, just to break people from TRS. Telangana for now has maintained a fiscal deficit of 3.21 per cent for FY 23 though the debt of the Telangana Government has jumped from Rs 75,577 crores in 2014, when the State was formed to Rs 3.66 lakh crores as of March 2023. This excludes the debt taken by Telangana State public sector enterprises. Will the people of Telangana fall into the same freebie race or will they look at the bigger picture and think prudently for their children and offspring? Only time will tell…