How to get broke by freebie-ing away

For all the singing hosannas to democracy, elections come at a great cost. Literally. Not just in campaign spending but also in the avalanche of populist promises made by parties. Though framed as efforts to reduce economic inequality through equitable redistribution, 'freebies' in the form of schemes have become a competitive tactic to secure votes, often at the expense of fiscal prudence. Take Maharashtra. The government's pre-poll giveaways have pushed state debt to a record ₹9.3 lakh cr, and widened revenue deficit to ₹45,891 cr for 2025-26. As a result, key promises, such as increasing stipends under Mukhyamantri Majhi Ladki Bahin Yojana and farm loan waivers, have been deferred in Monday's budget.

Most state governments rely on 'revdis' like free power, farm loan waivers, free transport and gas cylinders, and financial aid. Fiscal deficits widen as states adjust capex and revenue expenditure to accommodate these costs. In recent times, Maharashtra, Madhya Pradesh, Rajasthan, Telangana, Tamil Nadu and Odisha revised their budgets, reflecting this unsustainable trend. Punjab, Kerala and Karnataka face fiscal distress due to excessive welfare spending. Rajasthan, UP and West Bengal also grapple with mounting subsidy burdens.

Warnings have gone unheeded. In February, Supreme Court criticised this freebie culture, stating that it discourages work and distorts economic incentives. RBI's report, 'State Finances: A Study of Budgets of 2024-25', urges states to redirect subsidies towards productive investments in health, education, agriculture and infrastructure to ensure long-term economic stability. Political parties and voters must break this poll-induced cycle of short-term gratification at the cost of long-term prosperity.