In India, political parties increasingly employ “freebies” as a strategy to win elections, raising questions about the financial sustainability of such practices. Traditionally, handouts have varied widely, from bicycles to televisions, as parties seek to appeal to voters. Recently, cash transfers aimed particularly at women have gained traction as a successful electoral tactic.
Prime Minister Narendra Modi’s party reportedly experienced a significant victory in Bihar, the country’s poorest state, partly due to a handout of 10,000 rupees (approximately $112) to women prior to the election, which also witnessed a high turnout of female voters. Similar financial initiatives targeting women were introduced in other states, like Maharashtra, with political parties across the spectrum offering financial schemes before elections.
Despite some economists supporting these cash transfers as a mechanism for garnering political accountability from representatives, concerns about the “revdi culture,” which decries unsustainable electoral giveaways, persist. India’s Supreme Court had previously moved to curb such practices, labeling them “irrational freebies.”
Fiscal data from Emkay Global suggests that Bihar currently has a fiscal deficit of 6% of its GDP, yet the state introduced election schemes amounting to 4% of GDP, prioritizing short-term voter appeal over long-term economic investments. As many as 21 of India’s 29 states may have surpassed the recommended 3% deficit threshold, with election-based spending cited as a factor.
The Reserve Bank of India has noted that the growing burden of subsidies, including cash transfers and services, poses a significant risk to state finances. With more elections on the horizon, including those in states like Tamil Nadu and West Bengal, the trend of using giveaways to influence voter behavior appears likely to intensify, raising ongoing concerns about financial viability and responsible governance.
Source: https://www.bbc.com/news/articles/cjd0m874g05o?at_medium=RSS&at_campaign=rss