BLOG: Maharashtra's Budget: Short-term Populism Over Long-term Progress

Hello Everyone!

On June 28, 2024, during the monsoon session, the Maharashtra government presented its budget for the fiscal year 2024-25. This budget, the last before the upcoming assembly elections, comes in the wake of the ruling coalition, Mahayuti's, poor performance in the Lok Sabha elections. In a bid to regain public support, the budget includes a slew of populist measures aimed at various segments of the electorate.

Among the most notable announcements are the financial assistance of Rs 1,500 per month to eligible women aged 21 to 60, three free LPG cylinders annually for 52.4 lakh eligible households, a monthly apprenticeship stipend of Rs 10,000 for eligible youths, and significant reliefs for farmers, including free electricity. While such measures promise immediate relief and benefits, they represent a major portion of the state's budget and would necessitate increasing the state's debt burden by approximately Rs 1 lakh crore.

Maharashtra, already burdened with debt exceeding Rs 7.8 lakh crore and increasing rapidly every year, faces significant fiscal challenges. The decision to allocate substantial resources to these schemes, rather than addressing the state's fundamental issues, raises concerns about the long-term viability and efficacy of such expenditures. The populist measures appear to be driven more by electoral considerations than by a strategic vision for sustainable development.

The infrastructure in Maharashtra's metro cities is deteriorating. Commuting from one point to another within a city takes hours, severely affecting productivity and quality of life. The poor electricity infrastructure results in frequent power drops and voltage fluctuations, hampering both domestic life and business operations. Water management and distribution are in a dismal state, benefiting the tanker mafia while citizens suffer. Additionally, the poor law and order situation further degrades the living standards. All of this drives businesses to other states, exacerbating unemployment.

Instead of focusing on real long-term solutions, such as leveraging technology to address these issues efficiently and cost-effectively, the government, regardless of which party is in power, often prioritizes measures that fail to address the root causes effectively.
For instance:

• Consider the Rs 1,500 monthly financial assistance for eligible women, which is projected to cost around Rs 46,000 crore annually. Contrast this with a potential investment in education: a one-time expenditure of Rs 25,000 crore and an annual outlay of Rs 10,000 crore could revolutionize education for the 2 crore students in Maharashtra using technology in education. This program could provide the necessary hardware and digital resources, comprehensive learning systems, and integrated support involving students, teachers, schools, and government bodies. Such an investment would create employable youth over the coming decade, who can get good jobs worldwide, and significantly empower families across the state. Investing in such a tranaformative project has the potential to reduce long-term expenditures on traditional school systems, while significantly improving the quality of education. Even that would have helped the ruling parties gain votes as it would have provided tangible assets to millions of students in the state before the assembly elections. The government's approach highlights a fundamental issue: providing short-term reliefs is akin to handing out fish which would suffice them for a day, while transforming education is like teaching the youth to fish, ensuring long-term self-sufficiency.
• Previously made and currently paused, unpopular decisions like installing smart electricity meters, which come with significant upfront costs per meter, do not provide the immediate solution needed. Despite claims of being provided for free, these meters are ultimately funded by taxpayers' money. Moreover, the ongoing internet connectivity costs associated with these prepaid smart meters pose an additional financial burden on either consumers or the government's treasury. Such misguided solutions often appear to serve vested interests rather than effectively resolving underlying problems. The ideal long-term and financially viable solution could be a simple digital platform costing only Rs 10 per month per consumer, which can effectively increase bill recovery and find solutions to other problems through public participation, and save current expenses as well.
• Similarly, instead of temporary loan waivers, or half-baked solutions like eNAM (Electronic National Agriculture Market), farmers can be empowered with easy-to-use and genuinely useful digital solutions for getting better prices for their crops, and also doable solutions to reduce their dependence on loans. Reducing wastage of agriculture produce by building storage capacities at every village is another impractical announcement in this budget. This wastage issue is linked to demand-supply imbalance. Though the supply also depends on weather conditions and is unpredictable, yet real-time demand and supply statistics with a simple digital solution can solve this problem far more efficiently, cost-effectively and quickly.
• Another provision in this budget is about training 50,000 youths yearly for publicity of government schemes at the grassroots. Instead, government scheme publicity can be done more effectively, quickly, and efficiently at less cost through a digital solution utilizing existing resources such as thousands of local body members across the state. Interestingly, this approach can be politically far more beneficial than training 50,000 youths.

However, decision-makers seem reluctant to embrace new ideas, preferring to rely on old-school methods through their established 'channels'. The current budget provisions suggest that immediate, tangible benefits are prioritized over transformative, long-term solutions, without giving it a thought. This shortsightedness overlooks the potential for sustainable progress through strategic investments in critical sectors. This indicates not only the financial bankruptcy of the government but also the bankruptcy of talent and ideas. The budget can indeed be called 'A Budget of Idea Deficit'.

Moreover, the implementation of their populist measures is fraught with challenges. The existing bureaucratic and administrative systems are plagued with inefficiencies and corruption, raising doubts about whether the intended beneficiaries will receive the promised support. The eligibility determination processes and distribution mechanisms are vulnerable to loopholes and malpractices, further undermining the effectiveness of these schemes.

A well-aware citizen might feel disheartened and even depressed, seeing no hope in solving these fundamental problems, as the government's priorities are often misplaced. It is time to prioritize enduring progress over short-term electoral gains and to embrace innovative solutions by being more receptive to new ideas.

Many politicians possess a strong grasp of bureaucracy, essential for implementing schemes effectively, and have an extraordinary understanding of grassroots issues. If they were to combine their expertise with advanced, modern solutions, it would not only benefit the citizens but also secure a sustainable position for themselves in their political careers.

Thank you!