An issue of concern in 2025 ::: Fiscal deficit - Gujarat 'best governed' with lowest rates at 1.7 per cent ... NDA-ruled Bihar scored highest !!

It must be kept in mind that freebies and generous welfare measures leave an adverse effect on fiscal health of the state or even the national economy.

There is also impact on revenue/resource management and overall economic development. 

Such measures, particularly freebies, will encourage a culture of entitlement, misuse and political competitions making things worse. 

In the long run, what people may not realise is that there is a danger of such measures distorting prices,

We have to always appreciate that all such schemes/free electricity as in Delhi are funded by the tax payer’s money. 

The fiscal deficit figures of BJP-ruled Gujarat is at 1.7 per cent much less than the national figure of 3.3.

It's a large industrial state and garners sizable revenue.  

Fiscal deficit is the difference between the govt's income and expenditure. 

It is a key indicator that has implications for borrowing and financial commitments of the govt, which makes it a major news item before every budget. 

The central Govt's fiscal deficit stood at 46.5 per cent of its budget estimates in the first seven months (April-October) of the current financial year (FY2025).

 

For Uttar Pradesh and West Bengal it is at 3.5 per cent of the GDP. Significanntly enough, Bhar's record is pretty bad down the table - 8.9 per cent of the state GDP.  

These should bring us to the debate on freebies. Hence, now there may be concerns about financial deficit and financial management for states such as Karnataka and Maharashtra which have to implement a few 'welfare measures' and freebies. 

In Bihar's case revenue generation suffered due to Prohibition.  

In the last Budget, the government stuck to its fiscal consolidation roadmap even as coalition parties demanded more funds from the Modi government and the middle class urged for tax relief measures.

The lower fiscal deficit target for 2025-26 was expected on hopes of strong tax collections, despite the government’s continued capex push that is crucial to shore up consumption and create jobs and help India achieve its aim to be world’s third largest economy by 2030.

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Case study Maharashtra 

Ladki Bahin Yojna is being seen as one of the key factors responsible for BJP's spectacular win in Maharashtra.

Ladki Bahin Yojana aims to provide Rs 1,500 per month to all eligible women in the Maharashtra between the age of 21-65 years whose annual family income is below Rs 2,50,000. The aim of the scheme is to help women achieve financial independence, improve their health and dietary needs. The state expects 2.34 crore women to benefit from the scheme in the state. The total female population in the state in 2024 is estimated at about 6.3 crore based on the last census data of 2011.

About 2.2 crore females are expected to be below the age of 21 years. Out of the balance 4.1 crore females above the age of 21 years, the state estimates that about 2.34 crore will qualify for the scheme. 

The scheme was introduced in Maharashtra in July 2024 just on the eve of polls and disbursements for five months have been already made in about 2.3 million accounts based on early registrants in the scheme. 

Similar schemes are currently operational in Uttar Pradesh, Delhi, Bihar, Chhattisgarh, Goa, and Jharkhand also albeit with a few changes.

The cost to the Maharashtra government will be about Rs 46,000 crore every year which is about 12-13% of the states total budget for 2023-24.  

Now the reality check !! 

Many people may not realise what is a quota policy. In many states the reservations percentage is as high as 70%. 

These Reservation policies, that were introduced after independence, were part of welfare measures for the 'historically and socially' deprived sections of society. 

That was relevant for an infant nation. Today it is a Pandora's Box of complex conflicts of interest and political exploitation.

The founding fathers of the policy were very clear that such reservations would be only for ten years. 

But today after 75 years of independence, reservation/Quata issue are like dens of corruption and inefficiency. Nepotism !!

It is directly linked to vote banks and hence mediocrity. 

As a result Meritocracy gets sidelined. 

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