India’s Welfare Schemes: The High Cost of Freebies
Let’s Talk About the Elephant in the Room
You know how every Indian politician suddenly becomes Santa Claus before elections? Free electricity, cash handouts, bus rides—the works. But here’s the thing: someone’s gotta pay for all this generosity. And right now, it’s our infrastructure and fiscal health taking the hit. A recent CRISIL report dropped some truth bombs—states might end up spending a whopping ₹6.4 lakh crore on these schemes this year. That’s like spending 1.5 times our defense budget on freebies. Makes you think, doesn’t it?
Why Free Stuff Isn’t Really Free
From Tamil Nadu’s ladies-only free bus rides to Punjab’s practically-giveaway electricity, states are going all out. On paper, it looks great—helping the poor and scoring political points. But dig deeper, and you’ll find budgets stretched thinner than a Mumbai local at rush hour. Andhra’s direct cash transfers? Popular, sure. Sustainable? That’s another story.
Here’s what most people miss: when you spend 18% of your budget on free schemes (looking at you, Tamil Nadu), something’s gotta give. Usually, it’s the roads, schools, and hospitals that suffer.
The Numbers Don’t Lie
Let me break it down for you:
- Punjab: Spending more on power subsidies than health and education combined. That’s ₹26,000 crore going up in smoke—literally.
- Rajasthan & Kerala: Using 25-30% of their income just to pay interest on loans. Like paying minimum balance on a maxed-out credit card.
And get this—states borrowed 33% more in 2024 than before COVID. At this rate, five states could see debt cross 35% of their GDP by 2027. Not exactly a recipe for growth.
Infrastructure? What Infrastructure?
Remember that fancy Chennai-Salem highway announced in 2018? Still stuck in paperwork. Maharashtra put ₹12,000 crore worth of road projects on hold last year. Meanwhile, we need $840 billion in infrastructure by 2030. The math ain’t mathing.
It’s like choosing between buying groceries or paying your kid’s school fees—except we’re talking about entire states making these choices.
The Political Circus
Election season turns every party into a giveaway carnival. Karnataka’s 2023 promises totaled ₹52,000 crore. As Raghuram Rajan put it: “Today’s populism is tomorrow’s austerity.” Basically, we’re mortgaging our future for votes today.
Is There a Way Out?
Some smart folks have ideas:
- Stop Blanket Freebies: Use JAM (Jan Dhan-Aadhaar-Mobile) to target only those who really need help
- Fiscal Watchdogs: Independent bodies to keep spending in check
- Public-Private Partnerships: Get businesses to chip in for infrastructure
But let’s be real—none of this is easy when freebies win elections.
The Bottom Line
Look, welfare schemes have done good—no denying that. Millions eat because of food subsidies. But when freebies start eating into development funds, we’ve got a problem. It’s like feeding your family by selling your car. Works today, but how will you get to work tomorrow?
The CRISIL report isn’t just numbers—it’s a wake-up call. We need to find balance before the bill comes due. Because in economics, unlike politics, there’s no such thing as a free lunch.
Source: Navbharat Times – Default