Income disparity, Poverty and Aridity are reducing, but Freebie Politics is rising in Bharat; Why? Developed markets like the US & UK got into a freebie spree to sail through the Pandemic and the repercussions are calamitous!
Himachal Pradesh, then Karnataka moved away from Development & got into give-out electioneering; both states are ruined and hard-working people suffering despite paying taxes!
One of the famous Sanskrit shlokas talks about efforts and their resultant events.
The Shlokas:
उद्यमेन हि सिद्ध्यन्ति कार्यानि न मनोरथैः !
न हि सिंहस्य सुप्तस्य प्रविशन्ति मुखे मृगाः.!!
Meaning: The work, the task, and 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.
This Shlok 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.
Jan Sewawadi or Satta Vadi (Sanatani or Nepotistic), What Should one choose?
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 3000 years and that formed the bedrock of all rulers who ruled and prevailed with good governance in its various states as per the Values of Santana Dharma.
Even if the centre maintains its fiscal measures, fiscal prudence, and fiscal discipline, the states can still ruin the country’s image and credibility by excessive debt and freebie politicking
Sanatani, selfless leaders believe and practice – The highest level of Karma and Dharma ensuring Socio, Economic, mental and physical advancement and development of the state with a single focus to strengthen the Rastra (encompasses both the Boundaries and the people). In the process, the populace of the Nation would want them to be elected and re-elected again and again as they put the interest of the masses first before 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.
1. Divide & Rule – Disseminate the misinformation, create friction, aggravate abrasion, perpetuate the poison, spread the fear, take the side of the oppressor, portray the oppressor as the victim and rule. An example of it being the bifurcation of Bharat in 1947, planned by the Britishers and executed by Congress.
2. Buy the Influencers – Every social system works on influence. Influencers emerge from the grassroots by doing good ground-level work and reaching the local leadership level. From here on, the ones who need to build it as a career of prosperity and power and who are aspirational, need the support of big fish in the system. If such influencers can be corrupted, depraved from the core values, or perverted in the pre or post-electoral process, then power can come easily. Position, Post, and Money all work excellently well in buying them. In the modern context, the world has social media influencers, whose reach and word have expanded beyond physical ones, simply on account of smartphones and misinformation. One classic example of it is Ukraine, where systematically a comedian’s public profile was created, socialised and then elevated, post which he was brought to power through false narratives, to ensure the country then is destroyed and it becomes a big consumer market for the deep state to rule and manipulate and capitalists to rebuild again and profiteer from it.
3. Freebie or Appeasement Guarantee – This is the simplest and easiest tool to buy votes. Distribute freebies from the money that the taxpayers are giving. Make these freebies regular, so that dependency on the free money increases and the propensity to work and strive harder reduces, as dependency becomes stronger, the corrupt, continues to lead the state with a great level of inefficiency, incapability and leakage in the systems and enjoying the boon of such corruption within a small coterie. A classic case of this kind is Venezuela, which was once a prosperous nation based on petro economy, doled out freebies and today is subject to abject poverty with Hyperinflation of 190 per cent, with ~ 90 per cent of Venezuelans living in poverty and over half of them in extreme poverty.
The Worst of all
All three produce grave ills, however, the last one is the most calamitous, catastrophic and cataclysmic as it impacts the growth, and the ability to strive hard and persevere not only for the current but for the future generations as well. In simpler terms, this is the case of Economic and Mental Slavery that the political organisation creates. The current breed starts relying on fate, kinship and freebies to sustain. The forthcoming offspring sees the parents and continues to believe the coterie, connections and corridor of power can only bring success, fame and glory, thereby hard work, practice and persistence take a back seat.
Some States of Bharat Where Freebie Politics has started to create financial and fiscal havoc.
The Karnataka Story
A state that went into elections in May 2023 – Karnataka, where the incumbent government lost the majority despite doing developmental work to the freebie politics and the result was visible in a matter of weeks and not months.
A month before the election code of conduct was implemented, the sitting Karnataka BJP lead government in Feb 2023, presented the state assembly a revenue surplus budget for FY 24, with an annual revenue outlay of over 3 Lakh crore rupees, a first in Karnataka’s history as well as maintaining the fiscal discipline as per the FRBM ACT of under 3 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.
Some 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 Rs65,082 crore a year, as per various analysts. The new freebie expenses tantamounted to nearly 20 per cent of the State budget.
The free doles worked and Congress gained power and immediately after winning, all the development projects were put on hold. The winning 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 increased the fiscal deficit from a projected 2.6 per cent to ~ 6 per cent.
The Story of the United States
In the United States as a result of the Covid 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.
On top of it, Up to USD 500 per month was handed over for 3 months to Employees who were facing salary loss for at least 3 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 highest since Nov 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 2 per cent.
Furthermore, it created the problem of debt downgrade of the US government in August 2023.
The Himachal Story
Himachal Pradesh, one of the hilly Northern states of Bharat known for its hardworking, spiritually oriented and culturally progressive people. After years of mismanagement, in 2017, the ruling Party, 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.
But in 2022 to regain the state, amongst many others, 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 the Old Pension scheme to appease the retired government pensioners, putting pressure on the state exchequer. Thanks to the free guarantees and promises, Congress came into power in 2022 and the state’s fiscal math since then has gone for a toss.
In December 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 p.a. and the government of Himachal was able to manage the fiscal prudence by having the fiscal deficit within the parameters of the FRBM (Fiscal Responsibility and Budget Management) Act of 3 per cent.
In FY 2018, the fiscal deficit of Himachal stood at 2.79 per cent, 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 3 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, or salaries of government employees but and yet the freebie politics continued.
Congress maintained the free dole-outs, and the Himachal government’s fiscal deficit has been on the rise and far higher than planned. In FY 24, Himachal estimated a deficit of 4.6 per cent as a percentage of GSDP, however, revised it subsequently to 5.9per cent. For FY 25, it is presently estimated at 4.7per cent of the GSDP, but rating agencies believe that the revised estimates will be far far higher.
As of March 2018, the Government of Himachal had a debt of ~ 47,906 Crore Rupees, however, that surged to ~ 76,651 Crore rupees in 2023 and now that debt on the Himachal government has exceeded 90,000 Crore rupees. Freebies have only added to the pressure on the state with no cash for salaries and pensions, and virtually no money for any development project.
All these grave challenges, despite the fact that the Central government has constantly aided Himachal Pradesh. In FY 25, the total expenses for the hill state is expected to be ~ 52,965 crore rupees and ~ 56per cent of those expenses amounting to 23,412 crore rupees are being footed by the central government.
Freebie politics started with Delhi, spread to Punjab, migrated to Himachal, engulfed Karnataka and is now threatening every state that is going into elections.
Delhi was once a hugely profitable Union territory with a surplus budget and in FY 24, it had an estimated fiscal deficit of Rs 7,878 crore.
Four states in Bharat have very high levels of debt: Manipur, Nagaland, Punjab and Arunachal Pradesh. Of these, Punjab is particularly alarming as it has the highest size (amongst all 4) of the budget as well and it is pressured on all financial scores – debt ratio (Debt to GSDP touching ~ 50 per cent), fiscal deficit (4.1 per cent of GSDP in FY 24), 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 is in a deep debt trap.
Will the People of other states where elections are going to happen in months to come 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….
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