The “freebies” and cash assistance announced before the elections are taking a toll on the economic condition of many states in India. Bihar is the biggest example of this, where welfare promises can put an additional burden of up to Rs 41,000 crore on the treasury. According to the report, the debt of the states is continuously increasing and the expenditure has exceeded their earnings many times over.
Key Highlights
Free schemes and election promises are increasing financial pressure
Bihar: Burden of new scheme up to Rs 41,000 crore
More than 70% of the revenue of many states depends on the Centre.
Deficit and debt increase rapidly in election years
States’ income is low, but expenditure on pension-salary-subsidy increases
Mandatory expenditure of states may increase by 50% by 2025–26
📰 Complete news – in simple language
The trend of giving “freebies” and cash assistance has increased with the election season in many states of India. Political parties are releasing welfare schemes for the vote bank, but their impact is clearly visible on the financial condition of the states.
According to the report, the expenditure on these free schemes is increasing rapidly, while the earnings of the states are not increasing that much. This is creating huge pressure on the budgets of the states and the financial situation is becoming weak in many places.
🧨 Biggest impact – example of Bihar
Recently Bihar announced “Mukhyamantri Mahila Rozgar Yojana” and cash assistance of ₹10,000 to women. This scheme may impose a burden of Rs 41,000 crore on the state.
But 70% of Bihar’s income is dependent on assistance from the Centre. In such a situation, this burden can further weaken the state funds.
🗳️ Highest pressure in electoral states
In the last two years, the financial situation in the states where elections have been held has been seen worsening.
Reason – In the election environment, governments launch more and more free schemes, due to which the fiscal deficit increases.
💰Rising mandatory expenses
In addition to free plans, states are also burdened with several mandatory expenses:
In 2023–24, many states had to spend 62% of their total income only on these.
This expenditure is likely to increase by an additional 50% in the next two years.
📊Which state is most dependent on central funds?
(Share of transfer to be received from the Center by the states in 2023–24 as per the report)
State Dependence on Central Fund (%) Bihar 72.2% Uttar Pradesh 55.4% West Bengal 53.4% Madhya Pradesh 52.7% Rajasthan 46.2% Odisha 44.5% Gujarat 40.1% Kerala 29.1% Tamil Nadu 27.0%
FAQ — common questions
Q. Are free plans completely wrong?
No, many schemes are necessary for the poor, but big promises without budget create financial imbalance.
Q. Will further pressure increase?
Yes, if the earnings do not increase then both the deficit and debt of the states can increase rapidly.
Q. Can the Center help?
The dependence of some states on the Center is much greater than before. Without reforms the problem will persist.
