“Government’s work is god’s work.” Well, that’s what’s etched deeply on the Vidhana Soudha in Bengaluru. And this ethos seems to be even more deeply etched in the strategy of winning that the Congress put together in the recently concluded Karnataka Assembly elections.
The Congress seems to take this line rather seriously. So seriously, it announced a set of five Guarantees that promised to take care of the suffering of the masses. Five promises that offered free bus service for women across Karnataka, 10 kg of rice per person per month for every member of the BPL and Antyodaya card-holding families, 200 units of free electricity, Rs 2000 per month for women of all BPL and Antyodaya families and unemployment benefits of Rs 3000 for graduates and Rs 1500 for diploma holders passing out in the academic year 2022-23. If elected, the party promised to care for women and the unemployed with one stroke of a pen. And the party won on this plank—a clear majority to rule Karnataka.
Once the election brouhaha settled, it was time for the government to fulfil its promises. It was no longer the opposition but the ruling party with a mandate. The last two weeks were a game of wait and watch. With the guidance of its strategy team, the Congress was very keen to ensure a proper rollout that brings in no criticism. Remember, a faulty rollout would have negative ramifications for the party, its image, and its standing in the general elections slated for 2024.
And so, on June 2, 2023, the Karnataka government declared the modalities of the rollout. All five guarantees were announced with full-page print advertisements to help percolate the fine print. While the free bus travel commences on June 11, staggered dates for the rest have been laid out. The promises announced have been kept. The front end has been announced with pomp. The back end is yet to be managed. But even that shall fall into place, I guess. Siddaramaiah, the freshly minted CM of Karnataka, is an astute budget-maker of repute. He has helmed the state in tough times, and even this shall pass, I guess.
Looking at the economics at play, the five guarantees are estimated to cost anything between 45,000-62,000 crore rupees per annum, depending on who is doing the math. Assuming an outflow of Rs 45,000 crore per annum would mean an enormous burden on the state’s finances. There is criticism at one end and joy at another, depending on whether you are the funder of these five guarantees or the beneficiary. In sheer numbers, the beneficiaries will be larger; therefore, all is well.
If I am to look at these five guarantees, each of them has positive intent at its root. Free bus travel (Uchita Prayana) for girl students and women means empowerment and mobility at will. The 10 Kg rice per person scheme (Anna Bhagya) means added ability to provide food on the table in a poor home. Free electricity (Gruha Jyothi) and the two doles (Gruha Lakshmi and Yuva Nidhi) mean taking care of the needs of those not privileged enough to partake of the goodies of working life.
This means empowerment at every level of those not privileged enough to be taxpayers. Ballpark estimates indicate that there will be an additional income of up to Rs 45,000 per family within the ambit of the beneficiaries of these five guarantees. And that amount represents a whopping 25% of the per capita income of each of these families before the rollout of these guarantees. Who can argue against all this good intent? If the masses are happy, the classes will eventually be happy. Those who argue against this ethos will be considered elitist, highly educated, supra urban, distanced from reality and those who live more in the virtual world than the real, or the opposition.
The key point to note is whether the masses are unhappy. Post-Covid realities seem to bite the poor more than the rich. Inflation and high prices, joblessness and social angst seem to be real punching-bag issues. An election is possibly a great device in a democracy that throws up these real issues. The Karnataka elections threw these up certainly, and the party with the imagination to handle it with its creative solutions seems to have won.
From the point of view of PURE numbers, the Karnataka government needs to show a nifty ability to raise this requirement of Rs. 45,000 crores additionally per annum if it is to maintain its good record within the scheme of things of the Indian states and their financial strength. As per a CAG report, India is said to have spent as much as Rs. 200,000 crores on state subsidies and freebies in FY22 (representing Rs 1,411 per capita). Karnataka’s yen to spend Rs 45,000 crore additionally in this category will represent a blip on this already existing nationally aggregated number. The key point to make here, however, is that the fiscal deficit of Karnataka's annual budget will be a metric to watch keenly. This is the ultimate arbiter of good or bad health. Everyone will, therefore, wait keenly for the first budget of the Siddaramaiah government. One that just might surprise us all. In more ways than one.
Are the five guarantees rolled out freebies or palliatives? A freebie is really giving something that no one really needs desperately. Maybe a fan, a sewing machine or the like. A palliative is an offering that cures the symptoms that exist out of trauma. I believe the Siddaramaiah government is rolling out a set of palliative care items for now. Time will tell.
As I close this piece, I must say that there is a new model of governance we are looking at. This is the Karnataka model of governance circa 2023: A model that looks to apply that immediate economic balm on the part of society that is finding it difficult to survive. The Karnataka governance model, which has learnt from other states in India, Tamil Nadu included, brings in a new belief in Robinhood economics. The rich must take care of the poor. Till the poor become rich. If free electricity will help a student study that much more, if free bus travel to a girl student makes her get to college that much more diligently if free rice can fill stomachs otherwise hungry, Robinhood Economics sure does work. In the case of extreme distress, only extreme socialism works.
As an endnote, expect Robinhood economics to be a part of every election campaign in every state ready to go to the polls over the next year. Let’s see how this pans out. If nothing else, it is an interesting academic and economic watch.
Harish Bijoor
Brand Guru & Founder, Harish Bijoor Consults
(harishbijoor@hotmail.com)