The UP elections were no different with regard to the populism template but the freebies can cost the Yogi 2.0 Government upwards of Rs 50,000 crore
Populism is a global phenomenon, especially in democratic countries; and it gets disproportionately amplified during elections. By definition, populism could be summed up as catering to the basic needs and aspirations of the common people. It is characterised with public announcements even if it means giving scant attention to the underlying fiscal prudence or economic viability. Nonetheless, populism entails a cost. The schemes and projects drafted in populist rhetoric could be made possible only through adequate funding and planning.
The 2022 Uttar Pradesh assembly elections were no different with regards to the time-tested populism template. In India, populist announcements are known to have played a key role in determining polling outcomes. The electorate are believed to gravitate to a political party which makes superlative and fancy pre-poll promises.
Now that Yogi Adityanath 2.0 Government has re-taken the reins of UP, the tough task of walking the tightrope between fiscal mathematics and populist waitlist has befallen the monk chief minister.
By doing simple calculations based on the 2022 UP manifesto of the ruling Bharatiya Janata Party (BJP) or ‘Lok Kalyan Sankalp Patra’, it is evident that the new Government would require a substantial budgetary allocation of more than Rs 50,000 crore to fulfill its string of populist announcements and sops. Interestingly, the opposition parties especially the Samajwadi Party (SP) and Congress had also promised the moon to the UP voters. However, their defeat at the hustings saved them from the complexities of drawing up an action plan to fulfill the respective election plank.
Meanwhile, the schemes included in the BJP manifesto pertained to all key sectors viz. agriculture, social security, dairy, sugarcane, infrastructure, skill development, employment etc. The estimated expenditure on these heads would be in addition to the common public welfare programmes being run by the state Government.
Sample this: The BJP, in its manifesto, had promised to pump in Rs 25,000 crore in developing a robust network of cold chain and warehouses for the grading of major horticultural crops so that farmers get remunerative prices. The scheme would be known as Sardar Vallabhbhai Patel Agri-infrastructure Mission. Similarly, Rs 10,000 crore will be spent on another mega infra scheme, while nearly Rs 5,000 crore would be spent on facilitating farm irrigation.
To further sweeten the deal, the saffron outfit had promised to undertake a massive Rs 5,000 crore modernisation scheme to upgrade the state sugar mills. This is aimed at enriching the UP sugar value chain given the fact that more than 4 million farm households are directly associated with the sugarcane farming and allied activities. Since, the manifesto was hammered out in the backdrop of the farm stir, the document reflected an evident agricultural footprint.
Moreover, budgetary allocations would also be required for other schemes included in the BJP manifesto and targetted at fostering socioeconomic growth across the regions and to generate job and self-employment opportunities.
The estimated financial outgo of over Rs 50,000 crore, although spread over coming financial years, has to be seen in the context of the UP budget size and the plethora of financial limitations and constraints thereon.
On December 16, 2021, the Yogi Government 1.0 had tabled an Interim Budget for UP of more than Rs 5.45 trillion for 2022-23 financial year since UP polls were then approaching. An Interim Budget is meant to ensure that ongoing development projects as also sundry government expenditure are adequately met during elections - when the model code of conduct is in force - and also during later days, when a new government is taking shape.
Now, Yogi cabinet 2.0 will present a Full Budget in the coming months. The full-fledged annual financial statement would include the roadmap of raising the financial resources to translate the manifesto vision on the ground. In the UP Interim Budget, the Yogi government 1.0 had sought grants, through vote on account, for just Rs 1.68 trillion effective for the first four months (Apr-July) of 2022-23. This was estimated to garner sufficient funds from the consolidation funds for the new Government before a Full Budget could be tabled in the house.
According to the Interim Budget, the capital and revenue expenditure were pegged at nearly Rs 1.31 trillion and Rs 4.14 trillion respectively. The Budget had estimated total receipts of a little less than Rs 5.45 trillion, including capital and revenue receipts.
The projected revenue receipts of Rs 4.53 trillion included more than Rs 2 trillion of the State’s own tax collection apart from Rs 1.26 trillion as its share in central taxes. Besides, non-tax revenue and central scheme support kitty was calculated at more than Rs 23,400 crore and Rs 95,000 crore respectively. Although, on paper, the State appears to be in a fairly comfortable financial position, yet the government has already been running a slew of flagship infra projects, including expressways, as well as public welfare schemes, including free ration etc that eats away a major portion of the revenues.
The UP Interim Budget had estimated almost Rs 90,000 crore of credit line from different sources during 2022-23. The public debt has to be kept under check apart from provisioning for current debt servicing.
The surging oil prices following the Russia-Ukraine war and the pandemic hit economic recovery are two major areas of concerns for any Government. Hence, the Government would need a dexterous planning on the budgetary front with adequate provisions put in place to swiftly adjust its receipts and expenditure equation in unforeseen exigent situations.
(The writer is a Lucknow-based financial and political journalist. The views expressed are personal.)