In a bold but perilous move, the Maharashtra government has introduced the ‘Ladki Bahin’ scheme, a populist initiative brimming with promises of financial aid and incentives. However, this well-intentioned but flawed programme highlights a grim reality: the State’s leadership is sacrificing long-term fiscal stability for short-term electoral gains. While the scheme offers financial relief, its execution may worsen Maharashtra’s precarious financial situation.
Maharashtra is grappling with a revenue deficit of ₹20,151 crore and a fiscal deficit of ₹1,10,355 crore, with its debt burden exceeding seven lakh crore. Amid this, the government has introduced seven new flagship schemes estimated to cost nearly one lakh crore. The reallocation of funds for these schemes has placed immense pressure on essential services and existing programmes.
A consequence of this mismanagement is the suspension of aid to families of farmers who have died by suicide — a critical support measure of one lakh per family. Additionally, contractors across the Public Works Department are awaiting payments totaling approximately ₹500 crore for completed projects. These delays and suspensions underscore the significant strain on Maharashtra’s fiscal health.
The Ladki Bahin scheme exemplifies a broader trend in Indian politics: the reliance on populist schemes for immediate electoral gains. Financial aid may offer temporary relief, but these programmes rarely address the root causes of poverty and economic inequality. Such initiatives lead to unsustainable fiscal practices, failing to generate long-term growth or job creation.
During the UPA-II tenure, India experienced a period of fiscal stability, with a focus on employment creation through programmes such as MNREGA. This approach, prioritising sustainable job creation and infrastructure development, laid the foundation for long-term economic stability rather than opting for quick fixes.
Tamil Nadu and West Bengal have set valuable examples with their cash transfer schemes for women. Tamil Nadu’s Kalaignar Magalir Urimai Thogai offers ₹1,000 per month to women above 21, with stringent eligibility criteria based on income and land ownership. West Bengal’s Lakshmi Bhandar Scheme provides ₹500 to ₹1,000 per month based on caste and enrollment in the Swasthya Sathi health scheme. The Ladki Bahin scheme, however, appears to be a hasty imitation rather than a thoughtful adaptation of these models.
Flawed execution
Dr. B.R. Ambedkar once said, “However good a Constitution may be, if those who are implementing it are not good, it will prove to be bad. However bad a Constitution may be, if those implementing it are good, it will prove to be good.” This wisdom is particularly relevant to Maharashtra’s current schemes. Despite noble intentions, the Ladki Bahin initiative is hampered by poor planning and execution, leading to diverted resources, broader financial distress, and ineffective outcomes.
The increasing reliance on freebie culture in Indian politics is reaching dangerous levels, posing risks to the country’s fiscal health. While direct bank transfers are often promoted as solutions to poverty, they come with considerable costs. Other segments of society ultimately bear these financial burdens, especially when such schemes lack complementary strategies for employment generation or sustainable development.
Economists warn that India could face a fiscal collapse similar to Sri Lanka’s if such trends continue. In countries such as Turkmenistan, subsidies have been curtailed to target only those in genuine need. As neighbouring nations retreat from excessive subsidies, India’s political landscape appears to be moving in the opposite direction.
The current situation demands a critical reassessment of welfare schemes. States must shift from short-term freebies to sustainable solutions that offer long-term benefits. Expanding successful programmes, enhancing employment opportunities, and ensuring the efficient execution of welfare schemes can provide more substantial and lasting benefits to society. A strategic shift towards sustainable, employment-focused policies is essential to balance immediate relief with the State’s long-term fiscal health.
Piyush Zaware is a Master of Public Policy student at the University of Chicago
Published - October 07, 2024 12:49 am IST
