With the Delhi assembly polls now only weeks away, Aam Aadmi Party (AAP) convener Arvind Kejriwal recently announced that a monthly allowance being given to poor women would be increased from Rs1,000 to Rs2,100 if the AAP returns to power.
This is now a familiar refrain in Indian politics across the political spectrum. The BJP- Eknath Shinde alliance recently swept the polls in Maharashtra on the back of a similar scheme which gives money into the hands of women each month, among a host of other freebies.
In Jharkhand too Chief Minister Hemant Soren returned to power again after announcing cash payouts to women. The problem is that these “schemes” are coming at a huge financial cost which states simply cannot afford and while they may be needed in the short term, the long term harm to the economy is potentially huge.
Take the case of Delhi. The Finance department of the Delhi government has expressed concern about the expenditure on subsidies if the proposed increase in the monthly payouts to women goes ahead.
In Maharastra, there is growing concern about the financial health of the state whose fiscal deficit has nearly doubled in the financial year 2024. The flagship Ladki Bahin Yojana alone cost a staggering Rs46,000 crore annually and is all set to go up as the BJP-Sena promised to the increase the monthly payouts.
Free bus scheme for women
In addition to this, they have promised a monthly stipend of Rs10,000 for students, increasing benefits for farmers from Rs12,000 to Rs15,000 and more. This flies in the face of Prime Minister Modi’s public criticism of “freebie culture” but political parties across the board realise that this is key in electoral outcomes.
In Karnataka, deputy Chief Minister DK Shivakumar recently spoke about revisiting a free bus scheme for women in the state which lead to a slap on the wrist from his boss -- the Chief Minister.
Freebies aren’t new to Indian politics but it was largely a phenomenon we saw in South Indian states. Now, it’s across the board.
In the north it was the AAP in 2015 that set the ball rolling with free electricity, water and free bus rides for women. A study done by Axis Bank shows that as many as 14 Indian states have income transfer schemes which target women. There is no denying the fact that this money, no matter how small a sum, helps ease the financial burden just a bit when prices are high, and also gives women some independence.
But the bigger worry is whether these payouts are in effect a bribe to get women to vote for parties and whether, in the long run, this will disincentivise the state from actual policymaking that can improve the lives of the poor.
In other words, why would any government invest in making long term structural changes and reforms when its easier to hand out cash to voters and win elections?
Why bother with making better schools and hospitals which may take time to show results, when short term electoral gains are more immediate.
Freebies have been game changers in recent elections including Madhya Pradesh, Rajasthan, Karnataka, Delhi and of course Maharastra and Jharkhand.
In a country where the disparity between the rich and the poor is so huge, let us not underestimate the need for welfare schemes or their impact. But ultimately states will need to figure out how to manage their finances in a way that doesn’t burden people with more taxes.
