Freebies Boost Parasitic Dependence

There are sufficient indications that not all ministers in the Siddaramaiah Government agree on the continuation of the five guarantees implemented in the second half of 2023, following the Congress Party’s return to power. These five guarantees are costing the state exchequer ?52,000 crore, while the State’s total budget stands at around ?3.47 lakh crore. Deputy Chief Minister DK Shivakumar’s statement, hinting at the withdrawal of the free bus travel scheme, was subsequently repudiated by Congress Party President Mallikarjuna Kharge, forcing Shivakumar himself to attribute it to misinterpretation. However, it leaves little doubt that the significant expenditure on these schemes is straining the state’s finances, and not everything is in good shape regarding Karnataka’s fiscal health. Despite the Congress Party’s outward confidence on the matter, it is well known that the shortage of funds is a pressing issue for the state government.

Even before the current government had completed its first 100 days, a letter from 11 Congress MLAs citing a lack of funds was leaked to the media. Yet, having gained substantial electoral support through these populist promises, the party now finds it challenging to reverse its stance. It is still unclear what has come of the measures proposed by the Boston Consulting Group, a financial consultancy hired by the government to advise on revenue enhancement. One suggested measure – to monetise 25,000 acres of government land – had to be shelved following criticism from multiple quarters.

There is no denying that the five guarantees place a significant strain on the state’s resources. Gruha Jyoti (up to 200 units of free electricity), Anna Bhagya (5 kg of free rice per month for every BPL family), Gruha Lakshmi (?2,000 per month for women heads of households), Shakti (free bus travel for women), and Yuva Nidhi (?3,000 for unemployed graduates) are costly programmes with limited means to offset the revenue loss. The free bus travel and 200 units of free electricity for households in particular need to be reevaluated, as they risk making essential utilities financially unsustainable. Beyond accepting voluntary payments from individuals willing to contribute, the government should encourage those with a sense of civic duty to opt out of these schemes. In any case, such freebies are likely to foster dependency rather than advance the state’s welfare.