The results of the elections in Maharashtra and Jharkhand have been known. On the one hand, the BJP-led Mahayuti alliance has registered a historic victory in Maharashtra, while in Jharkhand, Hemant Soren’s JMM has won again. Although both parties have captured power in their respective states, the promises made during the elections can ruin the financial health of these two states. Experts say raising benefits and increasing the number of beneficiaries in many plans already in place can create fiscal pressure.
These schemes worked wonders in both states.
With the results of the legislative elections held in Maharashtra and Jharkhand, populism and freebies seem to be back in fashion, which may endanger the financial situation of the states. While the BJP-led Mahayuti alliance registered a strong victory in the Maharashtra elections thanks to its ‘Ladki Bahin Yojana’, the ruling Indian alliance in Jharkhand won the mandate for its numerous public welfare schemes, including ‘Maiya Samman Yojana’ and agriculture. Loan Waiver.
Experts warn about electoral promises
After this victory, experts have warned that the implementation of promises made before the elections on increasing monthly allowance under the highly popular ‘Ladki Bahin Yojna’ may put more fiscal pressure on Maharashtra’s finances. Macquarie Capital issued a note on Monday saying that the result of this fiscal policy will be that Maharashtra’s fiscal deficit will exceed the 3% target set for the state and to achieve this the state will have to increase capital expenditure. below.
How and by how much will the burden on Maharashtra increase?
In its note, Macquarie Capital further said that as part of its pre-election promises, the Mahayuti alliance of Maharashtra had promised to increase the rate per beneficiary under the ‘Ladki Bahin Yojana’ from the current Rs 1,500 to Rs 2,100. According to this, the total capital expenditure outlay for Maharashtra for the current financial year is estimated to be Rs 835 billion and the Girls’ Plan’s share in this amount will be around Rs 350 billion. Credit for the increasing number of women voters in assembly elections is also attributed to the increase in benefits under this government scheme. The analyst said that although only 1 million people will benefit from this plan, the efforts made for this. The number of applications has also increased almost two and a half times.
Overall, capital expenditure will need to increase by a significant 52% at the central government level and 40% at the state level in the second half of FY2025 (according to ICRA), Macquarie Capitan warned. observed in the semester respectively.
The situation is similar in Jharkhand too.
A similar situation can be observed not only in Maharashtra but also in Jharkhand. Jharkhand has ‘Maiya Samman Yojana’, under which Rs 1,000 per month is transferred to the accounts of eligible women, which has been promised to be increased to Rs 2,500. Currently, more than 50 lakh women are benefiting from this scheme. Along with this, farm loan waiver of Rs 4 billion has also been promised to 1.8 lakh farmers. The financial burden on the government will increase significantly by implementing them.
According to Emkay Global, an increase of Rs 2,500 per month under RMS for Jharkhand would mean an expenditure of Rs 90 billion (1.9% of GSDP), compared to the initially budgeted Rs 60 billion (1.3% of GSDP) in FY25. . Analysts have said that as states face increasing challenges raising revenue, the rave culture policy will increase fiscal pressure.
