Chandigarh: In poll-bound Punjab, it’s the season of populist announcements.
After announcing free electricity and an assured zero bill for 70% of the state’s population, the Aam Aadmi Party (AAP) went a step further on Monday (November 22) by announcing that it would provide Rs 1,000 per month to every woman in Punjab above 18 years of age if the party forms the government after next year’s assembly elections.
The announcement was made by AAP national convener and Delhi chief minister Arvind Kejriwal during the official launch of the party’s ‘Mission Punjab’ programme in Moga city where his two-day visit began on Monday.
The state’s economists and political analysts say the move will put heavy burden on the already-depleted state exchequer, but Kejriwal, addressing the media from Amritsar on Tuesday, defended the promise by saying that it would empower women and that the government will generate the extra revenue needed to implement it.
“What is wrong if our mothers use the money to educate their daughters or improve their economic conditions? In Western countries, it is called social security but here it was unnecessarily politicised,” Kejriwal said.
“No one objects when ministers and VIPs enjoy free electricity or perks at the expense of the public. For them, it is not mufatkhori (one who gets everything for free). If we give same perks to public, it is called an attempt at mufatkhori,” he continued.
Economist Lakhwinder Singh said that the estimated population of women above 18 years of age in Punjab is close to one crore, as per the 2011 census. This means that the total cost of this cash incentive to women, as announced by Kejriwal, will be no less than Rs 12,000 crore annually.
“Punjabis, both men and women, are self-respecting people. They believe in the labour of hard-earned money. Kindly do not make them beggars. Give them gainful employment, which they often demand,” said Singh.
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Sociologist Baldev Shergill from Punjab University told The Wire, “It is a short-sighted approach to not think of the long-term costs involved. It is a failure to understand the basic principles of social policy. With this meagre amount, how will a woman be empowered? It’s a joke, nothing else.”
Suspended AAP MLA and former journalist Kanwar Sandhu told The Wire that this announcement was nothing short of disaster for state finances. “Where will the money will for development works come from if all of the money goes into freebies?” Sandhu asked.
Kharar MLA Kanwar Sandhu was suspended by the AAP for “anti-party” activities in 2018. Photo: Twitter/sandhukanwar.
He further noted that the latest announcements show that the party is in a do-or-die situation to grab power in Punjab, without setting its house in order first.
AAP’s strength in the Punjab assembly has fallen from 20 MLAs to 11 since nine deserted the party or were suspended. Its vote share from the time it first contested – in the 2014 Lok Sabha elections – has gone down drastically.
Sandhu also said that Kejriwal’s earlier announcement of giving 300 free units of electricity to every household in Punjab along with already free power to farmers and other poor sections of the society would cost the exchequer between Rs 10,000 and 12,000 crore annually.
Coupled with Kejriwal’s latest women-centric cash incentive announcement, the cost to the state exchequer would be a whopping Rs 25,000 crore, Sandhu said, while Punjab’s total budget for the 2021-22 fiscal year was Rs 1.68 lakh crore. AAP’s subsidy bill just from these two announcements would be 15% of the current budget.
“A major portion of the state’s revenue goes to salaries, pension, debt payment and other committed expenditures. Where is the money for development and essential expenditure on health and education if everything goes into freebies?” Sandhu asked.
Congress MP from Ludhiana Ravneet Bittu called the latest announcement a “lollipop by AAP to fool Punjabis” in a tweet on Monday, nudging Kejriwal to talk about “employment and education”.
Apart from free electricity and the latest cash incentive, the AAP supremo has also announced that the party, should it win the election, would open 16,000 mohalla clinics in Punjab. As per Kejriwal’s own estimate, the cost of opening one mohalla clinic is Rs 20 lakh. This would take the total expenditure for setting them all up to close to Rs 3,200 crore.
Also read: What Does the Repeal of Farm Laws Mean for Punjab’s Assembly Elections Next Year?
Paradigm shift in populist welfare model in Punjab
The origins of this populist welfare model in India can be traced back to politics in Tamil Nadu, after which political parties across the nation adopted it as a doctrine for wooing voters, through one scheme or another
However, this model has seen a paradigm shift in Punjab. The first major populist welfare scheme in the state was the provision of free electricity to farmers in the late 1990s. Several subsequent government reports made recommendations to end the free power subsidies for rich farmers since the state’s subsidy bill has substantially increased, but no political party dared to do it.
The free atta-dal scheme for below poverty line (BPL) families was another such scheme, introduced in 2007.
In the last election, the Congress offered free smartphones to the state’s youth as well as debt relief packages for farmers.
The current populist policy, however, offers cash incentives at such a large scale that every category of people is included, irrespective of whether or not they need it. This is what is making the cost of implementation so huge.
States like Punjab that are neck-deep in debt can’t afford such schemes. As per the Punjab State Budget, the state’s debt is projected to cross 2.8 lakh crore by the end of the 2021-22 fiscal year. When the Congress took over the state, the total debt was Rs 1.82 lakh crore. This means that the state’s debt has risen by one lakh crore in the last five years of Congress rule. This situation is alarming since Rs 20,000 crore is spent every year in paying overall debt service obligations, including interest. This amount is increasing every year.
The Congress, with Amarinder Singh as the chief minister, raised Punjab’s debt by 1 lakh crore from 2017 to 2021. Photo: PTI.
Singh said that Punjab’s debt can’t be overcome unless the state increases its tax revenue, which at present is not more than 7% of the state GDP. Ideally, it should be 11%. “Populist schemes, of course put further pressure [on state finances] if the revenue remains at such a level that the state is forced to borrow to meet its expenses, as has been the practice here for many years,” he said.
“To make the state debt-free, the first step is to stop borrowing and start paying the principal amount. At present, we are just about paying off the interest amount only, which is increasing every year with increase in borrowing,” Singh said.
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AAP not alone in pushing populist policies
While Congress leaders criticised Kejriwal’s latest announcement, AAP is not alone in making populist promises. Congress chief minister Charanjit Channi has already slashed the state’s power tariff by Rs 3 per unit for people using less than 7 KW, putting an extra burden of Rs 3,500 crore on the state exchequer.
It also waived the pending bills of consumers belonging to the SC/ST communities, which amounted to nearly Rs 500 crore.
With these moves, the Punjab government’s annual subsidy bill to the Punjab State Power Corporation Limited (PSPCL) has likely gone up to Rs 17,000 – 18,000 crore. This includes free power to farmers which costs the state exchequer Rs 12,000 crore.
But the Punjab government has been defaulting on the complete payment of subsidy for many years, as worked out by the PSPCL. There has been a considerable default in power bills by government departments. As a result, the PSPCL has been fighting a financial crunch and is compelled to take heavy loans, leaving it with little scope to improve power infrastructure in the state.
Apart from free power, Channi capped the price of sand gravel in the state.
The Shiromani Akali Dal (SAD), which also has a history of populist welfare politics, being the first to offer free power to farmers and to introduce the free atta-dal scheme, went a step further and announced 400 free units of electricity every month if their party forms the government in Punjab.
The BJP had introduced a culture of populist announcements in most of the states in North India that it ruled over the last two decades. Most other regional parties also follow the same model. However, AAP, which started in Delhi by promising better health and education infrastructure, has also switched gears towards the populist welfare model in the last two years.
According to senior journalist and author Jagtar Singh, Punjab’s history says that such populist politics do not work in the state.
“In 1997, SAD announced free power to farmers. In the 1999 general elections, it lost badly,” he said. What Punjab needs is corruption-free administration, better governance, a drug free society and better employment opportunities for the youth so they don’t migrate to foreign countries. Sadly, all parties to this point have failed to deliver these things.
Also read: Why the Aam Aadmi Party Is in Crisis in Punjab
Kejriwal deflected questions on AAP’s CM candidate
Like in 2017, AAP is fighting this election around Kejriwal’s face. The party’s candidate for the chief ministerial position is still unclear; Kejriwal even deflected the question during Tuesday’s press conference, instead opting to engage in whataboutery by asking why AAP is asked this question repeatedly when the Congress chief ministerial candidate is not clear either.
“But I assure that the party will announce its CM face much earlier than other parties,” said Kejriwal, with state AAP president Bhagwant Mann sitting by his side.
On the question of defections from the party, Kejriwal said that those who left the party were opportunists. “But we don’t indulge in defection politics. Even today, as many as 25 Congress MLAs and two or three MPs are in touch with AAP. But it is not our politics to build the party that way,” he said.