Prime Minister Modi has said that the tendency of people to be seduced by the promise of free schemes in elections is dangerous as per the proverb who rings the bell for the cat.
While inaugurating the Bandelkhand Expressway project in Uttar Pradesh state, he said that making free promises for votes will hinder the economic development of the country and question the future of the youth. In this trend the rulers will not implement projects like infrastructural development. However, he warned that these are the foundations for development.
The central point of Prime Minister Modi’s speech is that this is a policy that shows a temporary desire to be free and questions the future. This comment is an indirect reference to the activities of Aam Aadmi Party leader Arvind Kejriwal.
With the Gujarat state assembly elections coming up later this year, the Aam Aadmi Party has already started its preparations for the same. Arvind Kejriwal has made an election promise to the people of Gujarat that if he wins the election and forms the government, he will provide 300 units of free electricity to all the houses.
The annual expenditure for this is Rs.8,700 crore. Already, the state’s power sector is saddled with a debt of around Rs 2.40 lakh crore, who will come to invest in this sector if such a promise is made. More importantly, there is no creative competition in the sector due to schemes like subsidy free. According to the report of OECD, India is ranked 108th in the list of countries with quality power supply.
Not only these free schemes, but also the absence of income tax on agricultural revenue, the unrestricted subsidy in sugarcane farming sector, and the threat to water and soil fertility due to fertilizer subsidy, we need to discuss.
Worse than this, election time promises like laptops, TVs, free thali and goats are being given endlessly.
Responding to this comment of the Prime Minister, Kejriwal provides free education, Sukhadaram etc. Apart from that, he said that he is giving free electricity only because there is space in the budget.
There is nothing wrong in giving subsidy if there is space in the budget of the state. However, the question arises as to whether the grant is being used in other beneficial ways. The Prime Minister’s opinion is that infrastructure facilities can be improved through this subsidy.
Any country has no other option but to create resources if it wants to achieve better development. Japan, South Korea, and then China, all countries have achieved growth through improved infrastructure.
Capital formation is the primary component of growth. This is the basis of any economic policy. Britain created capital by exploiting its colonies. Soviet Russia created it with the principle of statehood. Even China’s Deng Zhongping, first few will become rich. He said that long-term development will take place through it.
Also Read: ‘Free Project’ Culture Hurting and Holding Back India’s Growth
If there is such a thing as wealth, it can be shared with the people. We cannot claim that all social land schemes are free. Donations for education, health, skill development etc. should not be treated as free.
A few catchy announcements are all that is needed to create a business environment. However, its size and demand should be handled carefully. We should buy clothes according to the nature of our clothing needs.
Sri Lanka is the best example of this. The IMF warned Sri Lanka in its report in 2005. Sri Lanka has a fiscal deficit that is at its lowest level in 25 years, as public debt has risen and private investment has stagnated. The government warned in 2005 that this should be addressed in a long-term plan. But that didn’t happen.
We don’t need to compare India with Sri Lanka. Although India’s debt rose slightly last year, it remains at a stable level. According to the data of international organizations, India’s environment remains safe.
It is in this context that the Supreme Court has urged the Election Commission, Finance Commission, RBI, Niti Aayog and political party experts to consult together and resolve the issue as an end to this free promise culture.
A good way to do this is to put the approximate cost of the project in front of the people through election promises. A detailed explanation of election promises should be given to the people, insists Professor S Chandrasekhar of IGIDR Institute of Education.
Also Read: Are Subsidies Reaching Beneficiaries Properly.. What Are the Needs of India’s Poor?
It is questionable whether it is possible to fully accept the opinion of such experts in the Indian democratic system with states and various parties.
Last December, when Chinese President Xi Jinping spoke at an economic conference, he made an important comment on the policy of social welfare programs. He said that if any country adheres to the policy of social welfare program beyond its size, it will face a serious economic and political problem. There is not much difference between what Prime Minister Modi said and what Xi Jinping said.
Therefore, there is a situation where political parties have to seriously worry about the promise of free elections on their platform.
A cap should be made that only a certain percentage of the state’s budget should be spent on this free program. We have already brought an integrated approach on issues like GST, privatization policy, labor law etc.
Another good example is the removal of fuel subsidy and the increase in tax revenue. Therefore, even if the reformation in democracy is delayed, the outcome will be better.
Disclaimer – This article is a translation of an English article written by economist Manas Sakarvarthy
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