Madhya Pradesh: Poll-eve freebie wars raise spectre of unsustainable debt

The freebie war has begun between Congress and the BJP in poll-bound Madhya Pradesh.

Seemingly unmindful of the corrosive impact on the state exchequer of the pre-poll sops they have promised – and keep on promising – the BJP and the Congress are blithely competing with each other to woo the voters in Madhya Pradesh, as though they wield some magic wand whose spell will automatically salvage the perilously hallowed financial condition of the Madhya Pradesh government.

While the assembly election in the state is still three months away, both the parties have promised schemes totaling worth thousands of crores of rupees and they don’t look done with the promising spree yet. The “Revdi culture” in the state is in full play, notwithstanding its criticism by the BJP central leadership in recent past.

Rising Debt Burden

A look at the pre-poll promises and decisions of the Shivraj Singh Chouhan government, juxtaposed with its precarious financial condition, inescapably points to a big crisis the state is headed to. Unworried by the nearly Rs 3.5 lakh crore debt burden on it, the state government has already implemented several schemes having huge financial implication with an eye on the coming election.

Each citizen of Madhya Pradesh is under a debt of over Rs 41,000. The debt has risen by over 12 percent in the last one year. The average per capita debt in the state has been going up sharply in the past one decade. It was estimated at Rs 13,853 in March 2016 and Rs 10,896 in March 2014.

As per the state finance department, overall debt of MP as on March 31, 2022, was Rs 2.95 lakh crore. State finance minister Jagdish Devra told the state assembly in June this year that from June 30, 2022, to February 1, 2023, the state government took a loan of Rs 16,000 crore.

Since then, the government has taken an additional loan of Rs 10,000 crore in several tranches and is planning to take more to meet the expenses that its please-all announcements in the election year have entailed.

Chief Minister Chouhan and MP Congress chief Kamal Nath have promised to implement numerous costly schemes if their respective parties secure power. The cumulative effect of Chouhan’s poll bonanzas would result in an increase of 10 percent in the government expenditure. The average monthly expense of the MP government is Rs 22,000 crore, which is estimated to go up to Rs 25,000 crore per month. This means the expense-income ratio, which is already skewed, will get more so. The average receipt of the government per month is estimated at around Rs 20,000 crore.

Chouhan’s Sop Spree

Of the numerous sops offered by the BJP government , the Ladli Behna Yojana is the costliest. Under the scheme, the government has already started transferring Rs 1,000 each to the bank accounts of nearly 1.25 crore women from July. The state budget has allocated Rs 8,000 crore for this scheme for which close to Rs 1,500 crore is required every month.

The scheme has been launched to counter the similar one announced by the Congress which has offered Rs 1,500 allowance to women if voted to power. The Chief Minister has promised to raise the amount from Rs 1,000 to Rs 3,000 in future.

CM Chouhan has also announced to hike the honorarium of nearly one lakh Anganwadi workers from Rs 10,000 to Rs 13,000. A provision of Rs 135 crore has been made for e-scooty to students in the budget for 2023-24. Doubling the honorarium of employment assistants from Rs 9,000 to 18,000 is another expensive promise of the CM.

The honorarium of district panchayat president, vice president and deputy sarpanch and panch has been increased by three times. The government also issued an order in July to bring 1.5 lakh contractual employees at par with regular government employees in salary and other facilities.

Chouhan has been touring around the state to celebrate ‘Vikas Parv” since July 16. The government has planned to perform bhoomi-pujan and dedication of development works worth more than Rs 2 lakh crore till completion of the drive on August 14.

5 Guarantees & Counting

In a close race with the ruling party, the opposition Congress has also been making new promises apart from the five guarantees that comprise a comeback of the old pension scheme, a gas cylinder at Rs 500 to every household, Rs 1,500 per month allowance to women, free electricity up to 100 units and half charge up to 200 units, and farm loan waiver.

Just last week, on July 26, former chief minister and MP Congress Chief Kamal Nath made a new promise, a ‘Krishak Nyay Yojana’ (farmers’ justice scheme), to reduce the input cost of agriculture.

This scheme will include free power for agriculture pumps up to 5 horsepower to 37 lakh farmers, waiver of dues for power used for agriculture purposes, 12 hours of uninterrupted power supply for farmers, withdrawal of unjustified police cases on the farmers who participated in various agitations, and continuation of the loan waiver scheme for the farmers.

Given the freebies war between the Congress and the BJP, it might not be wrong to observe that whichever of the two parties wins, the ultimate loser will be the electorate of the state.

Rakesh Dixit is a senior journalist based in Bhopal. Views are personal, and do not represent the stand of this publication.