Karnataka: Congress outruns BJP in 'freebies race' by huge margin

Three main freebies announced by Congress would mean an additional burden of Rs. 58,000 Cr on the Karnataka state exchequer while BJP's two main freebies would impose Rs. 12,000 crore burden, which shows the fierce competition between the two major contenders for power in the May 10 Assembly elections, say economic experts.

Bengaluru (Karnataka) : The election process in the state has reached its final stage. Major political parties have been promising lots of freebies to woo voters. The burden on the state exchequer due to these freebies is going to be overwhelming, experts say. All three major political parties - Congress, BJP and JDS - have announced many promises with electoral victory becoming the sole criterion rather than pragmatism.

These freebies will give a big blow to the economy of the state which is just recovering from the economic hardship of the Covid and Lockdowns, say economists. The burden on the exchequer will increase manifold and there will not be enough money left for capital expenditure.

Congress this time announced six major free promises in its manifesto, which included 200 units of free electricity on which Rs 25,800 crores will have to be spent. A working woman in the family of a BPL card holder will receive Rs 2,000 per month. Currently, there are 1.28 crore BPL card holders in the state and Rs 2,000 per month is to be given to women of BPL families. It will cost Rs 30,000 crores annually under the Grihalakshmi scheme.

Congress has also promised free bus travel for women (Rs 3,000 Cr). Three major free promises of Congress will cost the exchequer an estimated Rs 58,000 crore.

BJP has not fallen behind and it promised to provide a free half-litre of Nandini milk to 1.17 crore BPL card-holder families and this will cost about Rs 8,000 crore annually on the exchequer. Free LPG cylinders promise to 1.17 crore BPL card holders will require Rs 3,700 crore per year. Thereby these two major free promises will add an estimated Rs 12,000 crore burden on the government exchequer.

There is a 14,699 crore revenue deficit in the state budget in 2022-23. Economists said that the lack of funds for capital expenditure will affect basic development. According to the Medium Term Financial Plan of 2022-26, 90% of the total revenue collection will go towards fixed expenditure only.

To understand the impact of free promises on the financial health of the state, they should be compared with the state's fiscal deficit and GSDP. According to the fiscal deficit should be within the limit of 3% of GSDP. Karnataka's GSDP for 2023-'24 is Rs 23.33 lakh crore. There is a fiscal deficit of Rs 60,531 crore. Congress' major freebie promises will put a burden of around Rs 58,000 crore on the exchequer. The cost of BJP's two free promises is estimated at Rs 12,000 crore. That would be about 19% of the total fiscal deficit.

Karnataka's total debt liability in 2013-14 was around Rs 1.36 lakh crore. During the Siddaramaiah government's many free schemes and loan waivers, there was a sudden rise in the debt burden. Due to the economic hardships caused by Covid and the lockdown, the state government again had to bear the burden of a huge amount of debt. The total debt liability of the state during the five years of the coalition and BJP government from 2018-2023 is around Rs 3 lakh crore.