Bihar election manifestos: Illusion of welfare, reality of debt

Electoral promises today trade long-term development for short-term applause and generational debt.

There was a time when the political manifesto was a foundational document of democratic choice. It used to be a sober, political contract outlining a political party’s socio-economic vision, which an informed electorate could discern through its philosophy of governance. That era seems long over now.

The electoral manifesto, now, has devolved into a transactional catalogue of giveaways, a reckless auction where financial viability is the first casualty.

It is no longer a document of vision, but a mere ledger of populist-promises, hollowed out to the point of parody. This is not welfare, but an allusion of welfare-promises safeguarded by false rhetorical beliefs.

It reflects a profound crisis of political morality, a systemic hollowing of a social contract, where the elected State may no longer be a facilitator of capacity, but a distributor of largesse.

In the current context, this is acutely visible in Bihar. The ongoing Assembly election is a revealing laboratory for this new grammar.

The alliance of opposition parties or Mahagathbandhan promises a vast, permanent expansion of the State, offering one government job per family and Rs 30,000 in direct cash transfers to women.

The ruling National Democratic Alliance counters with a model of capital-led growth, promising one crore jobs through Rs 1 lakh crore in private investment, though it too litters its manifesto with populist cash handouts.

This battle of promises is being waged in a state with virtually no money.

Bihar’s Own Tax Revenue is a mere 5.6% of its GSDP — one of the lowest in India. Before a single new promise is funded, nearly 42% of the state’s budget is already mortgaged to ‘committed expenditure’ paying salaries, pensions and interest.

The Mahagathbandhan’s manifesto is a promise to build a new storey on a house whose foundation is already crumbling.

This trend of competitive populism has crippled states that have walked this path. The promises in Bihar are not a beginning.

They are the tragic,
illogical conclusion of a political model that has already been tested, the results of which are a catastrophic failure.

This is not just a debate about welfare. It is a story of deception, fiscal traps and generational theft.

If Bihar is a laboratory of promises, Karnataka spells a cautionary tale.

Its 2023 ‘five guarantees’ experiment serves as the definitive post-mortem for this brand of politics. The consequences were laid bare in a devastating 2025 report from the Comptroller and Auditor General (CAG). In a single year, the guarantees flipped Karnataka from a revenue surplus state into a state with a Rs 9,271 crore revenue deficit. The fiscal deficit, the gap between what the state earns and what it spends, ballooned to Rs 65,522 crore.

But the true analytical insight is not the debt itself. It is the trade-off. To fund the guarantees, the state government had to find the money. It did so by defaulting on its own future.

The CAG report provides the smoking gun. Capital expenditure was cut by Rs 5,229 crore. This directly led to a 68% surge in incomplete infrastructure projects.

The NITI Aayog’s 2025 Fiscal Health Index (FHI) confirms this decline. Karnataka, once a fiscal model, has slipped from third to tenth in the rankings. This fall predates the current government, proving the malady is a bipartisan indulgence. Populism, once a symptom, is now the system.

A contagion of red ink

This fiscal recklessness is not unique to Karnataka. Punjab, with an FHI score of just 10.7 exemplifies the endgame of this strategy. Its debt has ballooned and its crippling interest payments now choke all productive spending. It is a state perpetually borrowing just to pay the interest on what it has already borrowed.

Andhra Pradesh tells a similar story, with its own data showing a staggering 84% fall in social capital expenditure as it diverts funds to revenue-side giveaways.

In both these states, the election manifestos of political parties were lined with freebies; what was missing from these poll documents was an economic roadmap to fund these political profligacies.

Yet, this is a political choice, not an economic inevitability. The same NITI Aayog report provides a powerful counter-narrative. Odisha, despite its ‘poor’ image, boasts the richest fiscal health in India with a score of 67.8.

It has achieved this by prioritising capital spending and prudent debt management. Uttar Pradesh, a state of enormous scale and developmental needs, has also demonstrated that discipline is possible, maintaining its capital expenditure nearly twice the national average.

These states prove that fiscal discipline is a political, not geographic, choice. 

Fraud of freebies

The fraud of populist manifestos is not just a moral argument. It is a mathematical one. Data on fiscal multipliers exposes the con.

A 2022 NIPFP (National Institute of Public Finance and Policy) report found that for every rupee spent on capital expenditure (CapEx), the economy grows by Rs 2.45. This is an investment. It builds a road, a port, or a power grid that lowers logistics costs, ‘crowds in’ private money and creates sustainable, long-term jobs.

In stark contrast, every rupee spent on transfer payments (subsidies, freebies) creates only Rs 0.98 in economic output. It is a net economic loss. The money is consumed and then it is gone, leaving no asset behind and creating no new productive capacity.

Populist manifestos are, therefore, mathematically anti-growth. They champion the 0.98 multiplier while suffocating the 2.45 ones. This ‘crowding out’ effect is what the CAG report found in Karnataka. 

A moral reckoning?

This raises the ethical question. Who pays for free? It’s not the politician who pays, but the voter’s child. Every subsidy today is a future tax on the citizenry for tomorrow. The tragedy here is that most citizens are applauding rhetorical promises while being pickpocketed in daylight.

The solution to this may not come from the judiciary. The Supreme Court’s 2013 precedent explicitly ruled that ‘irrational freebies’ in a manifesto cannot be legally classified as a ‘corrupt practice’. 

The old model of ‘Revenue Deficit Grants’ effectively created a perverse incentive, rewarding states for being fiscally irresponsible by sending them a cheque to plug the hole. A revolutionary new model being proposed is the ‘Development Deficit Grant’. This would link federal transfers directly to fiscal prudence and CapEx targets.

India’s political crisis is not merely fiscal; it is increasingly moral, dismantling the social and political contract. It is a crisis of accountability, where politicians have learned that they can promise the moon without paying for the telescope, confident that the bill will be paid by a future generation. The reckoning, perhaps, may come, not when the money runs out, but when voters finally realise they have been funding their own illusion of plenty.

(Deepanshu is dean, O P Jindal Global University and visiting professor at LSE and Research Fellow, University of Oxford; with inputs from Ankur Singh, research analyst, Centre for New Economic Studies)