Bihar freebie war: As the battle bells of Bihar assembly elections have started, there has been a flood of free schemes and populist promises in the politics of the state. Be it the ruling NDA alliance or the opposition Grand Alliance, both have put aside their fiscal prudence to woo voters and made such announcements, which have increased the risk of fiscal disaster. Elections have now become a competition for quick and obvious gains rather than long-term development policies or provision of public goods. This is short-term politics, where politicians just look at the next election and voters lose faith in governments and demand immediate money or freebies. This trend in Bihar is not only affecting the electoral equations but is also a serious challenge to the state’s emerging economy and youth aspirations.
Public goods: what the government is supposed to provide
Traditionally, governments were expected to provide the public goods that are the foundation of any society. These include strong roads, bridges, uninterrupted power supply, clean water, efficient sewerage systems, public health services, quality education and an effective law and order. The benefits of these goods are widespread and have positive externalities, but these benefits are not immediately visible.
The problem starts from here. When governments realize that spending on these long-term, infrastructure developments does not yield immediate electoral benefits, they choose the easier path. And when voters feel that governments will not be able to provide them with good education or healthcare, they ask for the next best thing: cash or free stuff. Thus, the reliance on short-term gains by political parties threatens the positive changes that have been taking place in Bihar’s economy over the last two decades.
NDA’s promises: Emphasis on women empowerment and DBT
The Nitish Kumar-led NDA alliance has focused on women empowerment and welfare schemes in its announcements, many of which have been implemented just ahead of the elections:
Chief Minister Women Employment Scheme (Startup Money): The NDA government has transferred Rs 10,000 each into the bank accounts of over 1.2 crore women, just days before the announcement of assembly elections. This amount has been given as startup money to start self-employment. The objective of this scheme was to provide direct financial benefits to a large section of women voters and to create a positive environment towards their government. There is also a promise of additional assistance of up to ₹2 lakh based on review after six months.
Increase in pension: The NDA government has increased the pension amount for women, disabled and elderly people from Rs 400 to Rs 1,100, which will benefit a large social section.
Free power limit: The NDA government has announced to provide free electricity up to 125 units for domestic consumers.
Attention to government employees: The honorarium of government employees and scheme workers (like Asha, Anganwadi, Mamta) has been increased, thereby appeasing a large organized section.
The NDA’s promises are more focused on Direct Benefit Transfer (DBT) and continuity of established welfare schemes, claiming to maintain fiscal discipline, although there is also criticism of large-scale cash transfers just ahead of the elections.
‘Stunning pledge’ of Grand Alliance: Guarantee of jobs, cash and free electricity
The opposition Grand Alliance, whose chief ministerial candidate is Tejashwi Yadav, has adopted a more aggressive ‘freebie’ strategy. His promises directly target the economic problems of youth and women, even if it means a huge burden on the exchequer:
Government job guarantee: The biggest and most risky promise of the Grand Alliance is to provide a government job to at least one member of every family in the state. Tejashwi Yadav has claimed that an Act in this regard will be brought within 20 days of the formation of the government and the process will be completed within 20 months.
Monthly allowance to women (‘Mai-Bahin Maan Yojana’): The grand alliance has promised to deposit Rs 2,500 per month for the next five years in the bank accounts of “eligible women”, which translates to Rs 30,000 annually. This promise comes in direct response to the NDA’s ₹10,000 scheme.
Free Electricity: The Grand Alliance has promised to provide up to 200 units of free electricity to each family, which is much more than the NDA’s promise of 125 units.
Withdrawal of Old Pension Scheme (OPS): To woo government employees, a promise has been made to re-implement the old pension scheme.
health insurance: It has also been promised to provide free health insurance up to Rs 25 lakh to every person under the ‘Jan Swasthya Suraksha Yojana’.
Making contract workers permanent: It has been promised to make all contract workers and outsourcing employees permanent.
The promises of the grand alliance, according to experts, could put an additional burden of around Rs 33,000 crore on the state exchequer.
The threat of fiscal ruin and youth aspirations
This ‘freebie’ spree could be fiscally ruinous, especially for a state like Bihar, which is already in debt of more than Rs 4 lakh crore. This additional annual burden of Rs 33,000 crore is 81 per cent of the state’s total development budget and more than half of the state’s own tax revenue.
This trend is contrary to the positive changes taking place in the economy of Bihar. Over the past two decades, the share of agriculture in the state’s economy has been declining, while the service and manufacturing sectors have been growing steadily. The average age of the state is less than 25 years. This young population doesn’t just want free money or electricity; She wants employment generation, skill development centers and industries.
This short-term thinking of political parties can disappoint this ‘aspirational class’ of Bihar. When voters see that governments cannot provide basic public services, they demand money, and politicians are happy to use DBT (Direct Cash Transfers). It’s a vicious cycle that hinders economic transformation.
Long term vision is the only solution
Bihar stands on an important path of development. It needs a long-term vision rather than short-term electoral gains. A vision that invites industry, creates employment opportunities, and equips the youth with skills and education. Political parties should focus on development, good governance and strong institutions instead of bankrupting the treasury. Only a long-term approach can take Bihar out of the cycle of poverty and channelize the aspirations of its young population. This election will prove to decide the fiscal health of Bihar and the direction of its future.