Rajasthan's fiscal stress may disrupt BJP's welfare pitch, say experts

The state is likely to incur heavy fiscal costs if all of the welfare measures including huge subsidies are to be implemented, say experts.

Jaipur: With Rajasthan being one of the highest fiscally-stressed states, the new BJP government would have to tread carefully to unfold its welfare pitch before the Lok Sabha elections, say experts.

However, keeping its promise of 'double-engine sarkar' intact, the Centre has tried to mitigate its financial distress by releasing a handsome tranche of funds.

Last week, a controversy had cropped up over the subsidised LPG gas cylinder promise made by BJP in its manifesto. The controversy had erupted after minister of state for petroleum and gas, Rameshwar Teli denied any such commitment been made when MP Javed Ali Khan questioned him about BJP’s manifesto promise of providing cylinders at Rs 450, in the Rajya Sabha.

In a bid to avoid embarrassment and before the Opposition could turn it into a rallying point, the state government reaffirmed its commitment to provide cheap cylinders to women from poor families soon.

In addition, the Rajasthan government also listed 10 programmes that would be taken up on priority, including the distribution of subsidised gas cylinders to Ujjwala scheme beneficiaries.

Other priorities include the preparation of a comprehensive compensation policy for farmers whose land was auctioned off due to non-payment of loans during the Congress regime. The lands of around 19,400 farmers were auctioned off in the last five years.

The financial assistance to farmers under the Pradhan Mantri Kisan Samman Nidhi (PM-Kisan), which is to support farmers in meeting their agriculture and incidental needs, has been increased to Rs 12,000 per year.

As regards to women safety, an exclusive women police station is to be set up in each district. Also, each police station would have a woman desk along with the setting up of anti-Romeo squads in main cities.

Heritage regional centres are to be set up in culturally rich regions with an investment of Rs 800 crore.

Quality education for all girls from KG to Post Graduation (PG) is to be made free in all government schools and colleges

An investment of Rs 2,000 crore is likely to help at least five lakh youths get trained, especially to be inducted in the tourism industry and also to let youths start their own enterprises.

At least 2.5 lakh government jobs have also been promised to the youths in the course of five years.

A Special Investigation Team (SIT) would investigate the paper leak scams, and other corruption and scams would also be under scanner with a promise of strict punishment for the accused.

The state is likely to incur heavy fiscal costs if all of these welfare measures including huge subsidies are to be implemented, which the state simply cannot ignore, say experts. Rajasthan with a debt-GSDP ratio of 40 per cent is a state already under high fiscal stress.

The PRS Legislative Research budget analysis of 2022-23, reveals that in 2022-23, the state’s outstanding liabilities is estimated to be 39.80 per cent of the GSDP, marginally higher than revised estimate for 2021-22 (39.53 per cent of GSDP). The outstanding liabilities is estimated to increase from 35.31 per cent in 2019-20 to 39.37 per cent in 2024-25.

Experts say the guarantees, which are given by the state to its firms to raise funds for government programmes, are negative on the state’s credit profile.

Dr Sanjay Lodha, state coordinator for CSDS-Lokniti, told DH: “Competitive welfarism has put the fiscal balance under a lot of strain in Rajasthan and per capita debt has reached alarming proportions. However, now that the BJP government is in power, both at Centre and in the state, we may expect a more generous release of grants from the Centre. What needs to be pointed out is that after the Lok Sabha elections, there will be a great surge in the prices of essential commodities.”

With Lok Sabha elections on the anvil, the BJP government is also rolling out similar schemes and cash transfers as the previous Congress government which was high on welfarism. The government is likely to do it at the expense of spending on education, health, agriculture, sanitation, water supply and others.

Economic experts say that these are public goods that add to human capital and boost the economy but they yield results over a long term. But voters, who are to be wooed, want immediate benefits like cash transfer and tangible benefits like infrastructure. So freebies become an easy tool to win elections.

According to PRSI, Rajasthan’s fiscal deficit for 2022-23 targeted at Rs 58,212 crore i.e 4.4 per cent of GSDP is expected to deteriorate further.

However, BJP's promise of the benefits of a 'double-engine sarkar' to the electorate made the Centre release Rs 4,396.64 crore funds to Rajasthan just before the New Year which would help alleviate the state’s fiscal stress and strengthen the work of implementing the social security programmes.