Subhadra Yojana

Governments are short term and take short-term decisions, because the long term is always perplexing and bewildering. Inclusive growth now only means transfer of money to the bank accounts of whoever politicians think will vote for them. But the risk remains that at some point of time, even voters who are now behaving equally irresponsibly will become fed up with weak economic growth and poor services, forcing politicians to make difficult choices

Promises matter in elections because voters lack rationality. As election history shows, freebies do get votes. Hitherto, it was a time-tested method of electoral success for a desperate opposition. It seems now even the BJP has appropriated the strategy and joined the freebies bandwagon, finally casting away its earlier pretence of facing the electorate only using the development mantra.

The newly-installed BJP government in Odisha has announced a grandiose scheme called Subhadra to provide one crore women from economically weaker sections and aged between 21 to 60 years direct financial assistance in their Aadhaar-linked bank accounts. The amount is Rs 50,000 payable equally over a five-year period in half yearly instalments, starting with the current fiscal.

The populist scheme, which is essentially not different from similar schemes in other states like Lakshmir Bhander in West Bengal, would cost the taxpayers a humongous sum of Rs 55,825 crore. It has been projected to generate a multiplier effect, potentially contributing Rs 2.5 lakh crore to Odisha's economy over the next five years. The assumptions behind this calculation are unknown and mysterious in the dynamically changing socio-economic environment, but it is certain to create a big hole in Odisha's future budgets after it had recorded a fiscal deficit of Rs 15,201 crore in FY23. Likely, it will push the poor state deep into the red and push its nominal growth rate way down below 16 per cent recorded in FY23.

Odisha will not be the first state to suffer from the jitters of populism; it will follow the illustrious examples set by many other states - West Bengal, Punjab, Karnataka, Himachal Pradesh, Telangana, Chhattisgarh etc. But in this article we shall examine Karnataka, where Congress President Mallikarjun Kharge has recently rebuked Chief Minister Siddaramaiah for making electoral promises it cannot fulfil.