Pop­ulism cloud on state Bud­gets

Deccan Chronicle - - Edit -

It is elec­tion sea­son again. As the states present their Bud­gets be­fore the new fis­cal year be­gins, the fear is that run­away pop­ulism could prove the big­gest threat to fi­nances. The na­tional Bud­get had set the trend ahead of the gen­eral elections and the states seem to be com­pet­ing with each other to of­fer free­bies like gold and grants while also go­ing out of the way to pla­cate farm­ers who may have suf­fered the most in re­cent years from agri­cul­tural dis­tress caused by fall­ing prices of food grains, fruits and veg­eta­bles. While min­i­mum sup­port price and var­i­ous other sub­sidy schemes — from crop loans to crop in­sur­ance — are al­ready in place, the dif­fi­culty has lain in get­ting the ben­e­fits to the truly de­serv­ing like the share crop­pers and agri­cul­tural work­ers. The op­tics have be­come so im­por­tant in be­ing seen to be do­ing more for farm­ers that the states are com­pet­ing to top up what the na­tional Bud­get may have promised, like the `6,000 per year to small farm­ers.

Any sup­port to farm­ers should be wel­come as they pro­vide the coun­try with food se­cu­rity. But states have elec­torates that go be­yond the ru­ral, ur­ban and semi­ur­ban voter are as big a con­stituency to po­lit­i­cal par­ties. The Kar­nataka Bud­get, be­sides ad­dress­ing the 40-lakh strong farmer com­mu­nity, ad­dresses the ur­ban voter too. A bet­ter planned city in­fra­struc­ture for Bengaluru has been al­lo­cated a whop­ping `1.2 lakh crore bud­getary al­lo­ca­tion for rail and road con­nec­tiv­ity in a mod­ern, multi-modal in­te­grated trans­port sys­tem. The fluid po­lit­i­cal sit­u­a­tion in the state with the JD(S)-Con­gress coali­tion hav­ing just suf­fi­cient num­bers over the BJP to rule may have spurred cer­tain ad­ven­tur­ous­ness with the Bud­get for the ru­ral-ur­ban push.

The more ex­pen­sive hand­outs like free gold worth `38,000 crore to brides in As­sam, be­sides free rice to about 20 lakh tea es­tate work­ers and grants to tem­ples and mosques, mean fi­nances will be stretched like never be­fore. But bal­loon­ing deficits do not seem to have dis­suaded most states from plac­ing fis­cal pru­dence above pop­ulist mea­sures. Tamil Nadu might have been an ex­cep­tion but then, de­spite its de­sire to keep the deficit to within three per cent of Gross State Do­mes­tic Prod­uct, the state faces a debt bur­den in ser­vic­ing debt close to `3.79 lakh crore (in­clud­ing PF). The Ut­tar Pradesh Bud­get seems as con­cerned by the cow as vot­ers to the ex­tent that it has al­lo­cated `600 crore for cow wel­fare. The huge eco­nomic cost of pop­ulism does not seem to de­ter gov­ern­ments from fund­ing sops and free­bies in poll year Bud­gets even though the voter is an un­pre­dictable an­i­mal when it comes to which but­tons he will press on the EVM. The point is all gov­ern­ments seem to wake up only after four years and prom­ise the moon only in poll sea­son.

More ex­pen­sive hand­outs like free gold with `38,000 crores to brides in As­sam, be­sides free rice to about 20 lakh tea es­tate work­ers, mean fi­nances will be stretched like never be­fore.

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