THE Maharashtra Assembly elections are done and dusted. The MahaYuti, led by a resurgent Bharatiya Janata Party, has demolished the Maha Vikas Aghadi and also the perceptions around its slump with a scintillating show. The focus now shifts on Government formation with new equations and also on ushering in of new freebies promised to the voters. The spotlight, once again, thus comes back on the doles which the MahaYuti has pledged to hike for women. In fact, the entire spectacle of election in Maharashtra was driven by competitive populism by both the alliances. In the end, the MahaYuti’s ‘Mukhyamantri Maazi Ladki Bahin’ scheme clinched the issue for the BJP-led alliance. Already beneficiaries of Rs 1500 per month since July, the women eligible under the scheme are now ready to reap a dole or Rs 2100 per month promised in the MahaYuti’s election manifesto.

 

This generosity definitely turned into a gamechanger for the ruling alliance but it now adds an additional burden of Rs 18,000 crore on the exchequer. Estimated cost of the dole would be Rs 64,000 crore every fiscal which raises many questions about the culture of doles promised to win electoral battles. There are divergent views on populist measures adopted by political parties. Some term it as a necessity to survive in electoral contests while most flag it as slow erosion of fiscal health of a State or a country. The fact remains that a show of lavish giveaways always comes with a big price. But the nitty-gritty of finance management and governance makes it extremely difficult for the common man to decipher the source of raising funds for these doles. Obviously, it comes through additional taxes for the I-T payers in various garbs. But what is always missed is the threat of debt it raises due to additional borrowing by the State. In the absence of proper revenue generation such freebies can force a Government to additional borrowings to finance the welfare schemes. It is definitely not a good omen as the ill-effects of such generosity can easily lead to a vicious cycle of continuous fiscal deficit and debt.

 

There is no doubt that States have to adopt supportive fiscal policies during pressing situations. The financial support to the poor and downtrodden during the COVID-19 pandemic was a necessity to tide over the testing times. It proved to be a huge respite to the weaker sections of the society. But it cannot become a regular feature for the want of popular support to win elections. The downside of such doles is dangerous. A manifestation of such dangers is evident in the European countries and also in the United States which supported regular doles to the financially weaker section without creating adequate avenues to use their working skills. It led to mushrooming of a section of the society which refused to indulge in physical work leading to various afflictions including health problems. A smaller reflection of this culture has started playing out in the fields of Maharashtra, where tillers and millers are finding it extremely difficult to get labourers for field work. The sugarcane fields in Western Maharashtra and the cotton and rice belts in Vidarbha are undergoing a crisis of manpower in peak seasons.

 

The cascading effect of this crisis has the potential to spill over to the plate soon. Women form the core force of labourers in agriculture fields across the country. Their reluctance to add to family income due to the monthly Government benefit is set to spiral into an economic crisis for cultivators. The Kharif season saw a steep rise in daily wages of women labourers due to their unavailability and the situation is set to get difficult in the Rabi season with the increase in monthly dole. High cost of labour coupled with low prices for farm produce is a double whammy that might haunt the agriculture fields in Maharashtra in case of natural calamities and droughts. Monetary help through welfare schemes for the weaker sections is definitely a noble idea. But it cannot come at the expense of productivity. Heightened sense of reliance on the Government directly results in decreased productive capacity of people. Then there are multiple fiscal dangers already flagged by the Reserve Bank of India. The Central bank’s Risk Analysis made two years ago points out that “Freebies are detrimental to credit culture, have a distortionary impact on prices, discourage private investment, and reduce labour force participation.

 

Together this will eventually have negative ramifications for economic growth. The extension of fiscal support through freebies on a continuous basis to a large section of the population also suggests that a meagre success has been achieved in ensuring equitable, sustainable and all-inclusive economic growth.” An easy-going population, averse to taking new challenges, is an anathema to a fast-growing economy like India. It is imperative for the policymakers to again evaluate the costs and benefits of such freebies. Timely withdrawal of fiscal stimulus should also be factored into the policy of freebies. A prudent way to dole out generousness can come through schemes promoting the spirit of entrepreneurship. Encouraging the ‘ladki bahins’ for modern farming and commercial enterprises with direct help in the form of equipment and sources can easily result in more productivity, wise use of manpower and generation of additional revenue at the grassroots level. On the lines of schemes like Mudra loan, additional incentives for women farmers can also bring a sense of healthy competition without too much burden on fiscal health of the State. The focus has to be on optimum utilisation of human resolve with such policies and minimising costs arising out of doles. n