Electoral freebies underpin growing drift in states' fiscal discipline

Bihar goes to the polls on November 6 and 11, marking the beginning of a crucial electoral cycle. Eleven more states will hold elections over the next two years. The spectacle of pre-election giveaways and populist promises will capture the headlines, as it always does. What will matter more, yet draw less attention, is the steady erosion of states’ fiscal discipline.

 

The deepening fault line of sub-national fiscal drift beneath India’s political economy is now hard to ignore. Evidence of competitive populism is mounting. Press reports put pre-election doles across eight states over the past two years at ₹67,928 crore.