FREEBIE SEASON
The monsoon is still one whole summer away, but it’s raining sops in Madhya Pradesh. That should not surprise you—look only at what will follow the post-monsoon season. An assembly election that’s frequently bundled with the set that’s called the semi-finals before the big one. And in February, it feels like harvest time already. Political parties are outdoing each other with promises that occupy the full spectrum from genuine welfare to outright freebies—with land to cash to houses, everything being on offer. A lot of the population is not complaining, since they are in line to be beneficiaries, even if the competitive populism is raising eyebrows among neutral economists and sinking hearts among the slender band of taxpayers.
On January 28, Chief Minister Shivraj Singh Chouhan announced that a ‘Ladli Behna’ scheme would be unveiled very soon. The architect of the 2007-vintage Ladli Laxmi scheme—under which financial support is promised to girls when they attain maturity, and whose success prompted its adoption by other states—said he had been thinking of doing more for his sisters. Under Ladli Behna, a woman above the age of 18 but not belonging to a family that pays income tax will receive Rs 1,000 per month. Finance department mandarins claim they have not been asked to work out the financial burden of the scheme, but preliminary calculations put the annual outflow at Rs 12,000 crore. Around 12 million women are expected to be covered under the scheme, registrations for which are to start on March 8—Women’s Day. The payouts are likely to begin in August, around Rakshabandhan.
The Ladli Laxmi scheme, the precursor to Ladli Behna, had yielded political dividends for Chouhan, nationally showcasing him as a
successful CM. He’s evidently intent on further strengthening his support base among this demographic. Women account for 48 per cent of the 54 million voters in MP.
A few weeks earlier, Chouhan had announced free residential plots to be parcelled out to the poor. The first lot of plots was distributed in Tikamgarh, covering 10,500 beneficiaries, and later in Singrauli district, this time benefitting 25,000 people. The scheme doesn’t involve a payout, and land is indeed a plentiful resource in MP, but the cost of the land has been officially estimated at Rs 120 crore in Tikamgarh and Rs 250 crore in Singrauli.
Top sources in the government say there may be an upward revision in the amount paid as part of the CM Kisan Kalyan Yojana. At present, over 8 million small and marginal farmers get Rs 4,000 each annually, besides the Rs 6,000 paid by the Union government under the PM Kisan Samman Nidhi. The state’s amount is released in two instalments. How much the new increment will amount to is not yet known. Official sources foresee some initial hiccups as small and marginal farmers—who make up much bigger numbers than medium and large farmers—will be given the raise before the election.
The Congress had, in the run-up to the 2018 assembly election, announced a farm loan waiver. This was to be done in stages and the party claims it will
keep its promise in 2023, if voted to power. The party has also announced bringing back the Old Pension Scheme for state government employees—the very promise which put wind in its sail in Himachal Pradesh, and which it is backing elsewhere too. How it will be financed is not known yet. The party has also not estimated the outgo.
A look at MP’s finances will not be out of place here. The 2022-23 state budget estimated expenditure at Rs 2.48 lakh crore. This did not include the massive debt repayments that are burgeoning every year. The fiscal deficit was estimated at 4.56 per cent of GSDP—above the 4 per cent deemed permissible by the Centre last year, that too with the consideration that power sector reforms would be introduced. The total liabilities of the state government presently stand at a whopping Rs 3.45 lakh crore and fresh borrowings show no signs of abating.
How are the new sops to be funded? No one has an answer. The state’s tax revenues—excise, taxes on fossil fuels, stamps and registrations, mining etc.—stood at Rs 81,613 crore in 2021-22 and are expected to rise to Rs 87,945 crore. Of these, the targeted collection from excise was Rs 13,613 crore for 2022-23. However, former CM Uma Bharati has been running an anti-liquor agenda, demanding prohibition, so that’s a narrowing window. The state has to raise additional revenue to fund all the sops. The only avenues open seem to be to hike taxes on fossil fuels or enhance borrowings, neither of which is without complications. But who has the bandwidth to listen to arcane fiscal issues when short-term political survival is itself at stake? ■