So, the father of freebies in Indian politics is finally down and out, and one hopes for good. A man who came to power riding on the hopes of over one a half million voters of Delhi including myself, promising to cleanse the political system of the overwhelming corruption that had infested every cell in its body-politick had to leave finally under the dark shadow of corruption under the cloud of many scams.
A man who promised to end the VIP-culture that mocked Delhi’s common people at every step ended up reinstating the same evil culture of which he became a beneficiary.
A man who swore never to use a government bungalow after becoming the chief minister of Delhi ended up creating a “sheesh-mahal” for himself at a huge cost to the public exchequer.
A man who promised to usher in value-based politics in India in place of its caste-ridden vote-bank politics ended up bribing the voters to buy their votes through the innovation of freebies, unleashing a sinister force that has now enveloped all the political parties in the country and that has now setting the states in an irreversible slide down a slippery slope towards insolvency; the fiscal health of many states has now been damaged beyond repair and they are already in the ICU, gasping for breath.
Voers has finally given a resounding answer to the man who wanted them to vindicate his innocence, in a deafening voice. In a democracy, a party owes nothing to the electorate except good, corruption-free governance.
But experience has shown that voters tend to get swayed by short-term monetary incentives, and parties find transferring money to their accounts through DBTs far easier than providing good governance.
So, it’s a win-win situation both for the parties and the voters, and the compulsions of electoral politics is now compelling every political party to outcompete each other in promising almost unlimited freebies to the voters. The BJP initially resisted this, and even mocked the revdi-culture indulged in by the opposition, but has now joined the freebies-bandwagon with a vengeance.
Freebies now cost the nation an estimated Rs 2 lakh crore annually - depriving their use for creating income-generating capital assets to secure the future of the nation. In many cases, the freebies flow freely to benefit even those who may not need them in the least.
BJP has won the Delhi election convincingly and will form the next government. It has its own promises of freebies to the electorate to deliver, including continuation of AAP’s welfare schemes like free electricity up to 200 units, besides Rs 500 subsidy on LPG cylinders and a free cylinder each during Holi and Diwali.
It has promised to launch a Mahila Samridhi Yojana, under which Rs 2,500 per month will be provided to all women from low-income families, besides increasing senior citizens’ pension, etc. The irony is that once it assumes the rein of power, it will find itself greatly constrained by the fiscal realities and honouring its promises may lead to severe curtailment of expenditure on infrastructure for the development of the city that the capital badly needs, especially to improve its health and education infrastructure, clean the Yamuna, tackle the perennial air pollution and fix the water problems of Delhi.
The freebies promised alone will cost the exchequer an estimated Rs 18,500 crore a year – as per the finance department’s appraisal to CM Atishi while assessing the revised budget estimates for 2024-25, as reported in the media. According to this assessment, the three major ongoing subsidy schemes cost around Rs 4,500 crore in 2024-25, which included Rs 3,600 crore for subsidy on electricity, Rs 500 crore for free water supply to eligible households and Rs 440 crore for free travel for women in government buses.
If subsidies to the cash-strapped Delhi Transport Corporation and Delhi Jal Board are taken into account, the total outgo on subsidies would exceed Rs 10,000 crore.
Add to this the cost of providing Rs 2500 under the Mahila Samridhi Yojana which is estimated at another Rs 10000 crore, and the new government will find itself struggling to find the resources even for a rich state like Delhi.
In the absence of finance accounts of the Delhi government from the CAG of India beyond the fiscal year 2021, one has to rely on the revised estimates for 2024-25, according to which the total outlay for the year stood Rs 77,700 crore, increased from the budget estimates of Rs 76000 crore.
As against this, its total revenue receipts comprising the tax and non-tax revenues and the central grants totalled to only Rs 64,521 under the budget estimates, leaving a fiscal deficit of Rs 13,171 crore as against Rs 6565 crore originally budgeted, to be bridged by borrowing. Given this situation, how the new government will fulfil its electoral promises while seeking to complete the ongoing infrastructure projects and discharging its debt servicing obligations remain to be seen.
Ronald Reagan had once said, “Government is like a baby: an alimentary canal with a big appetite at one end and no sense of responsibility at the other.”
The father of freebies has eroded that responsibility way beyond any possible salvage for the entire nation.
(The author is a former Director General at the Office of the CAG of India, and is currently a Professor at the Arun Jaitley National Institute of Financial Management.
Opinions expressed are strictly personal.)