Congress poll guarantees: Haryana set to bear financial burden of populism
Party’s please-all manifesto contains seven guarantees, including doubling social security pension to ₹6,000 a month, monthly stipend of ₹2,000 to all women, free electricity of up to 300 units and subsidised LPG cylinder for ₹500.
If the Congress gets to form the government in Haryana in 2024, one of the toughest jobs in the new government will be that of its finance secretary.
The grand old party on Wednesday announced a “please all” abridged election manifesto containing seven guarantees including doubling the social security pension for the elderly, the widows and the disabled to ₹6,000 a month, a monthly stipend of ₹2,000 to all women, free electricity of up to 300 units for domestic consumers and subsidized cooking gas cylinder for ₹500.
The announcements, if implemented, are set to balloon the revenue expenditure of the state government by about ₹43,100 crore, thus burdening the state exchequer and disturbing fiscal indicators.
A tentative estimation of the financial implications of the freebies announced by the Congress entails an additional expenditure of about ₹10,900 crore alone on account of doubling the social security pension amount for 31.51 lakh beneficiaries from ₹3,000 to ₹6,000 per month.
“As per the 2024-25 budget, the provision for social security pensions had increased from ₹1,753 crore in 2013-14 (about 3.2 % of the total budget expenditure) to ₹10,971 crore in 2024-25, financial year (about 5.78 % of the total budget expenditure). Since 2014, the number of beneficiaries of social security pensions have increased from 22.64 lakh in December 2014 to 31.51 lakh. The financial liability only on the account of social security pension would be more than 11% of the total budget expenditure. Simply speaking, if the social security pension amount is doubled, the expenditure will also get doubled,’’ said an official.
Similarly, the ₹2,000 per month monthly stipend promised for the women, financial experts said, would entail an implication of about ₹16,800 crore annually on the state exchequer only if about 70 lakh below the poverty line (BPL) women are given the benefit. The financial burden will be much higher if all the women are made beneficiaries of the monthly stipend scheme, said an official.
Officials said that the electricity subsidy bill of the government will inflate by another ₹3200 crore if the Congress provides 300 units of electricity free of cost to 45 lakh domestic households. The state government has already committed ₹6350 crore for rural electrification subsidy this fiscal to provide cheap power to farm sector.
Similarly, by promising to provide a cooking gas cylinder for ₹500, the new government will have to bear a subsidy of about ₹320 per cylinder. “If 30 lakh BPL families are provided subsidized cooking gas, the new government will get itself burdened with an additional expenditure of about ₹1200 crore annually,’’ said an official.
Officials said that expenses from the revenue account will go through the roof if old pension scheme (OPS) is implemented by the next government.
Associate professor and chairperson, department of economics, Panjab University, Chandigarh, Smita Sharma said that most of the states, including Punjab and Himachal Pradesh, were getting into debt traps after promising freebies. The financial burden then forces the state governments to increase their market borrowings, she said.
Sharma said Haryana would also get stuck up in a debt trap if these freebies are implemented. “The long run impact will be that new recruitments will be affected and there will be a repercussion on the new generation. Development works will suffer and creation of capital assets will be a casualty. The long-term repercussion of freebies is bad,’’ she said.