Freebies Politics: Banking sector regulator Reserve Bank of India has expressed concern over the populist announcements being made by the state governments like farmer loan waiver, free electricity-water, free bus rides for electoral gains. Is of. RBI warned in its report that due to such populist announcements, the development of social and economic infrastructure may be affected.
The Reserve Bank of India has released a report named State Finance: Study of Budgets of 2024-25 on Thursday, December 19, 2024. In this report, RBI has said that many states have announced loan waiver for farmers. Apart from this, states have announced to provide free electricity for both agriculture and domestic purposes. According to RBI, free transport facility is also being provided in some states. Apart from this, apart from allowances to unemployed youth, help is being given to women for the financial year 2024-25.
RBI has said in its report that this type of expenditure can affect the development of very key capabilities like social and economic infrastructure. Such populist announcements can affect the development of these things which are considered very important. In its report, RBI termed the burden of subsidy on the state exchequer as dangerous due to increased expenditure on items like loan waiver of farmers, free electricity to agriculture and households, free transport as well as cheap LPG cylinders, cash transfer to youth and women. Is. RBI has asked the states to control their subsidy expenditure and rationalize it so that there is no shortage of funds for expenditure on the development of social and economic infrastructure.
RBI has also expressed concern in its report about the deteriorating financial condition of state electricity distribution companies (DISCOMs). According to RBI, the financial health of discoms remains a serious challenge to the financial condition of the states. Despite financial restructuring, the outstanding debt on power distribution companies of states has increased from Rs 4.2 lakh crore to Rs 6.8 lakh crore in 2022-23 with an increase of 8.7 per cent from 2016-17, which is 2.5 per cent of GDP.
In fact, in the last few years, populist announcements are being made on a large scale in the states to win the assembly elections, at the center of which are women, to get their votes, such announcements are being made in the states ruled by all the parties.
