Finance Minister Nirmala Sitharaman talks about freebies/revdi issue

BJP who had earlier campaigned heavily against 'revdi culture' has seen a shift with the saffron party announcing a host of measures across poll bound-states including Delhi and Maharashtra. From its popular 'Ladli Behna' scheme that is considered a success formula for the party to free electricity, the Finance Minister has cleared that the party is only offering such measures after understanding the fiscal strength of a state.

"I think what the BJP is doing is understanding what is the fiscal strength of a state. And only if they think that in that state that scheme can be sustained, they offer it," said Finance Minister Nirmala Sitharaman during an exclusive conversation with ETNow.

Freebies came onto the political scene in India for the first time in the 1967 elections in Madras. The state was reeling under a severe food crisis with restricted supply of rice and rising prices. However, freebies were mainstreamed in Indian politics when AAP promised free electricity and water in the 2013 Delhi assembly elections. This was the first time that the basics were promised for free.

Even though Prime Minister Narendra Modi has criticised these as "muft ki revdi" in the past, BJP has itself promised pension for women above 18 years and similar benefits. Right now, all political parties are promising sops and the list has become innovative and endless.

What are BJP freebie promises for different states?

BJP in Madhya Pradesh:
Ladli Behna scheme proved to be a gamechanger for BJP in the last year's elections, but the state government is facing severe financial burden due to this and a few other poll promises. In August alone, the state government borrowed ?10,000 crore loans in four equal installments. In the last fiscal year, Madhya Pradesh borrowed ?76,230 crore as per revised budget estimate, taking the total debt of the state to ?4,18,056 crore. The BJP government is planning to borrow ?94,431 crore this fiscal year.

The state has allocated ?18,984 crore for the Ladli Behna scheme this year. In addition, it offers ?4,775 crore on agriculture pump subsidy, ?3,500 crore for offering 100 units of electricity at ?100, ?6,290 crore on electricity subsidy to farmers and ?1,231 crore for the Ladli Laxmi scheme for girls. The above subsidies and direct cash transfer amount to a total of ?34,780 crore. This year, it made a provision of ?1,17, 945 crore for salaries, pension and interest payment on loans. The state government has estimated a fiscal deficit of 4.1% of the state GDP or GSDP, which is higher than 3.5% recommended by the central government. In his budget speech, deputy chief minister Jagdish Devda had said the state will try to bring the fiscal deficit back to the prescribed limits.

BJP in Haryana
The BJP promised minimum support price (MSP) on 24 crops to farmers and financial aid of Rs 2,100 to all women in Haryana. This was to counter the key promises of Congress of 300 units of free electricity and free medical treatment up to Rs 25 lakhs for every family.

BJP in Maharashtra
The BJP-led Mahayuti alliance embraced a freebie-driven campaign strategy, marking a stark departure from Prime Minister Narendra Modi’s earlier condemnation of ‘revdi culture’. This pivot follows the alliance’s disappointing performance in the recent Lok Sabha polls, even though its cash handouts to women in Madhya Pradesh in the Lok Sabha polls, the Ladli behna scheme, had established the effectiveness of such populist and welfare schemes. State finance minister Ajit Pawar, in a post-Lok Sabha budget presentation, unveiled a series of populist schemes, including the ‘Mukhyamantri Maajhi Ladki Bahin Yojana’, which has garnered significant attention, ‘Ladka Bhau Yojana’, and promises of free LPG cylinders for the economically disadvantaged. The Mahayuti began with a Rs 1,500 dole under its Ladki Bahin scheme, and later now promised to give Rs 2,100 when it returns to office.

BJP in Delhi
The BJP has expressed its intention to maintain the current scheme of free electricity up to 200 units and has gone a step further by pledging ?500 subsidies on LPG cylinders and a free cylinder during Holi and Diwali. BJP president JP Nadda has also promised enhanced healthcare support through the Ayushman Bharat Scheme, offering ?10 lakh health insurance coverage for Delhi’s senior citizens and economically disadvantaged families. Additionally, the BJP’s manifesto introduces a focus on education, pledging free schooling from KG to PG at government institutions, along with financial aid for competitive exam aspirants. As part of its welfare initiatives, the BJP also unveiled the Mahila Samridhi Yojana, under which ?2,500 per month will be provided to women from low-income families. Nadda also confirmed that pensions for senior citizens would be increased, with payouts rising from ?2,000 to ?2,500 for individuals aged 60 to 69, and to ?3,000 for those above 70.

BJP in Odisha
BJP, who dethroned BJD and ousted Patnaik from the seat after 24 years, promised to create 3.5 lakh jobs in five years, provide a cash voucher of Rs 50,000 for women, refund the money lost by people who invested in chit fund companies, and ensure procurement of paddy at Rs 3,100 per quintal.

How are freebies affecting states' economy?
As per Reserve Bank of India's report, 'State Finances: A Study of Budgets 2024-25' report observes, 'Several states have announced sops...in their budget... Such spending could crowd out the resources available with them and hamper their capacity to build critical social and economic infrastructure." The PRS Legislative report, 'State of State Finances 2024-25', says Punjab, Andhra, Gujarat and Rajasthan spend the most on subsidies .

Once political parties come to power, the fiscal reality makes governments check their pre-election exuberance. Like, Maharashtra is mulling over pruning its beneficiary list for Ladki Bahin Yojana, Congress-ruled Himachal Pradesh has been carefully going through the list of beneficiaries of different schemes. It had promised Rs 1,500 per month pension for women. But as the scheme was rolled out, the government decided that a woman would be eligible only if the family is not drawing a pension already. A senior government official said, "We also defined 'family' as a unit comprising a husband, wife and children. This does not include in-laws or parents."