Freebies, in the form of direct financial assistance, subsidized utilities, and promised government benefits, are a significant component of political campaigning and governance in many regions. The state of Himachal Pradesh in India has been frequently cited in recent discussions as a case study where the implementation of such populist measures has led to substantial fiscal challenges. This article examines the promises made by political parties, the resulting financial strain, and the ongoing debate surrounding targeted versus universal welfare programs, based exclusively on the provided source material.
The political landscape in Himachal Pradesh, particularly during the 2022 state assembly elections, was characterized by extensive promises of freebies from both the Bharatiya Janata Party (BJP) and the Indian National Congress. According to an opinion piece, both parties "made a range of tall promises" to appeal to the electorate. The Congress party, which ultimately formed the government, campaigned on a platform that included providing Rs 1,500 per month to every woman, 300 units of free electricity per month, the restoration of the Old Pension Scheme (OPS) for government employees, and various sops for apple growers. The BJP, meanwhile, focused on welfare schemes, developmental works, and policy changes that were part of its national agenda, such as the introduction of the Uniform Civil Code. The party also promised an All India Institute of Medical Sciences (AIIMS) in Himachal, the construction of roads, the generation of 8 lakh jobs, pucca roads in all villages, five medical colleges, mobile clinic vans, ex-gratia for the family of martyrs, the Him start-up scheme, and the distribution of bicycles and scooters to girl students, along with 33 percent reservation for women in jobs. The Aam Aadmi Party (AAP), another participant in the election, promised Rs 1,000 to every woman.
The scale of these promises is significant given the state's demographic and employment structure. A larger portion of Himachal Pradesh’s population is engaged in government service or the public sector, with approximately 4.15 lakh employees. Pensioners comprise around 10 percent of the electorate, making pension schemes a critical electoral issue. The Congress party's promise to restore the Old Pension Scheme (OPS) was a major poll plank. The OPS ensures a pension of 50 percent of the total salary at retirement, which is generally more favorable than the National Pension System (NPS) that was previously in place. The NPS is structured differently, with a 10 percent contribution from the employee and a 14 percent contribution from the government, resulting in a comparatively lower amount at retirement. The Congress party's commitment to revert to the OPS is seen by some as compromising its earlier commitments when it withdrew the OPS in 2003 under Virbhadra Singh in favor of the NPS.
Following the election, the Congress government under Chief Minister Sukhvinder Singh Sukhu faced immediate and severe financial difficulties. A news report from September 2024 indicates that several government employees in Himachal Pradesh had not received their September salaries, raising concerns about the state's financial management. The Leader of the Opposition, Jairam Thakur, attributed this crisis to the Congress government's inefficiency and the "false guarantees" made to gain power. He stated that when the government proceeded to implement some of these guarantees, the state plunged into a financial crisis. This situation is presented as a direct consequence of the populist promises made during the campaign.
The financial strain is not a new issue but has been exacerbated by recent policies. When the Congress government assumed power on December 11, 2022, it inherited a debt of Rs 75,000 crore from the previous BJP government, along with liabilities of Rs 10,000 crore for government employees. The state's financial health has deteriorated further due to unchecked freebies. A major contributor to Himachal Pradesh’s financial crisis is its growing expenditure on salaries, pensions, and subsidies. With limited revenue sources, the state has been forced to take loans to meet its financial obligations. The Congress government's promises of Rs 1,500 per month to every woman and 300 units of free electricity have not been fully delivered due to these financial constraints, while the state's debt burden continues to rise.
The situation in Himachal Pradesh has sparked a mixed political reaction, even within the ruling party's opposition, the BJP. While the current BJP leadership under Jairam Thakur has been critical of the government's handling of the financial crisis, some senior BJP leaders have expressed support for rationalizing freebies. Stalwart senior leaders like former Chief Minister Shanta Kumar and former Speaker Dr. Radha Raman Shastri have endorsed the Congress government's measures to rationalize incentives and free services, praising the end of "freebies" for the affluent as a necessary step toward economic responsibility. They argue that the focus should be on providing targeted assistance to the poor rather than subsidizing services for those who can afford to pay.
Former Union Minister and senior BJP leader Shanta Kumar stated that it is not right to provide free electricity and water to wealthy individuals. He supported the decision to end these subsidies, emphasizing that the government should operate with the spirit of Antyodaya, providing substantial help to the poor and modest support to the middle class. This perspective aligns with a broader national trend within the BJP, which advocates for reduced subsidies and a more targeted welfare approach. The criticism of freebies, including by Prime Minister Narendra Modi, did not seem to have a significant impact on electioneering in Himachal Pradesh, as both major parties continued to promise a range of freebies during the campaign.
The case of Himachal Pradesh illustrates the complex interplay between populist politics and fiscal sustainability. While freebies are often used as a tool to garner electoral support, their implementation can lead to severe financial crises, affecting the state's ability to meet its basic obligations, such as paying salaries and pensions. The debate now centers on whether to continue with universal freebies or to shift towards a more targeted welfare model that directs resources to those most in need. The mixed reactions within the political spectrum, including support from certain BJP leaders for ending subsidies for the affluent, indicate a growing recognition of the need for fiscal responsibility, even if the political appeal of freebies remains potent.
Conclusion
The situation in Himachal Pradesh serves as a cautionary tale about the fiscal consequences of populist promises. The state's financial crisis, marked by unpaid salaries and a rising debt burden, is directly linked to the implementation of freebies such as direct cash transfers and subsidized utilities. While political parties continue to use such promises to win elections, the aftermath reveals the challenges of sustaining them. The emerging consensus among some political leaders, including senior BJP figures, is that subsidies should be targeted to the poor rather than provided universally. This shift towards a more rationalized and targeted approach to welfare may be necessary to ensure long-term fiscal stability, though it remains to be seen how this will be reconciled with electoral politics.