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Benefits and bribes

  • Published
    27th Nov, 2023

Context:

Doles and freebies announced during elections and their impact on the country's long-term financial health are problematic.

Election Promises and MSP Politics

  • Rajasthan and Chhattisgarh MSP Battles: Congress promises MSP based on Cost C2, BJP contends with A2+FL. Competition in MSP pledges creates economic challenges and potential inflation.
  • Free Ration Announcement: During Madhya Pradesh elections, PM Modi commits to 5-year free ration. Rising food subsidy bill concerns arise with increased MSP projections for wheat and paddy.
  • Inconsistent Policy Approach: Despite MSP promises, the government unloads excess paddy and restricts non-basmati rice exports, revealing policy inconsistency. The economic impact and fiscal pressure are major concerns.

Dangers of Unchecked Populist Measures

  • Temporary Economic Boost: Promised doles may temporarily increase rural incomes, stimulating rural demand and some business opportunities.
  • Agri-Market Distortions: Unchecked promises lead to significant distortions in agricultural markets, potentially harming the overall economy.
  • Fiscal Challenges: Unplanned populist measures strain state and central finances, posing long-term risks and challenges to India's economic development.

Need for Prudent Electoral Promises

  • Caution in Promising: Parties urged to exercise caution in making populist promises to avoid long-term damage to India's development.
  • Focus on Income or Investment Support: Advocates for income or investment support within budgetary limits, offering crop-neutral solutions.
  • Taxpayers' Committees Proposal: Suggests the Election Commission or Supreme Court form taxpayers’ committees to evaluate the rationality of promises and educate the electorate.
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