Freebies Become A Burden For Siddaramaiah

The five guarantees on the back of which the Congress rode to power in the 2023 Assembly polls in Karnataka, are proving to be a costly affair for Chief Minister Siddaramaiah.

While the Congress was obviously delighted at the electoral success that followed its promised freebies, recent developments indicate that not much homework appears to have gone into the financial implications when it came to delivery.

This explains Siddaramaiah’s current dilemma as the guarantees have turned into a millstone around his neck. The state exchequer does not have the required resources to implement the party’s flagship schemes.

Witness, therefore, the government’s knee jerk reaction in mobilising the much needed funds to meet the cost of the otherwise popular schemes with the list of beneficiaries soaring to over Rs five crore.

While during the ten-month period of 2023-24, the government provided Rs 36,000 crore for these freebies, in the current financial year the allocation hovers around Rs 52,000 crores.

Last year, the government resorted to a steep hike in stamp duties to mobilise funds for the schemes. According to reliable sources, payment of salaries to the permanent staff of a few government institutions was also delayed.

Anganwadi workers in some districts did not get their salaries on time. And even development works including roads, bridges and canals also took a backseat as funds were diverted to implement the guarantees.

This year, the government increased the sales tax on petrol and diesel by Rs 3 per litre, to mobilise Rs 3,000 crores. This threatened to stoke inflation, much to the discomfort of the common man. The immediate impact of this was the increase in the prices of Nandini milk, effective June 26. It will now cost Rs 24 for half a litre against Rs 22 earlier.

The government is claiming that the hike has been affected by the Karnataka Milk Federation (KMF), the cooperative which produces the milk. The government has refused to admit that the increase is the result of a hike in sales tax on auto fuels.

Meanwhile, plans are now afoot to mobilise additional funds by increasing the water tariff and bus fares, according to announcements by the state ministers. This has annoyed the taxpaying public.

Siddaramaiah pinned the blame for the hike in sales tax on fuel prices on the Goods and Services Tax (GST), claiming that the Centre had left him with little option to raise additional revenues. The argument was basically to counter the state wide protests by the Bharatiya Janata Party (BJP) against the increase in tax on auto fuels.

The Opposition also began circulating video clips of Siddaramaiah’s speech when he was protesting against a similar hike by the BJP government earlier. Video clips of the Congress leader showed him arguing that the levies would lead to inflation while hurting the common man.

Notably, the additional mobilisation of resources will go to fund schemes including free bus rides for women, giving Rs 2,000 to the woman head of a family, 200 units of free power, 10 kg of rice per person, and giving Rs 3,000 to unemployed graduates.

This has made it difficult for the government to withdraw or revise them now, notwithstanding the demand to do this, by several Congressmen. The partymen have attributed their comparatively poor performance in Karnataka in the Lok Sabha polls to the poor implementation of the schemes. They want the leadership to review the guarantees by extending them only to the deprived sections.

The government, however, is determined to continue with its “welfare schemes” as it would be impossible to withdraw them considering the scores of beneficiaries who now look at these measures as their entitlement. The government has no choice but to raise additional resources, going by Siddaramaiah’s refrain to this effect.

Therefore, it is not surprising to see the government now enlisting the services of the Boston Consulting Group (BCG) to help identify new areas for resource mobilisation, much to the annoyance of the BJP.

Its state unit chief, B. Vijayendra, claimed that the appointment of the consultant, who is charging Rs 9.5 crore for resource mobilisation, was akin to “ceding control to the East India Company”.

“When the state government operates under the directions of an external agency, the welfare of people takes a backseat and innocent citizens are the ones to suffer,” Vijayendra said.

The BJP drew some comfort from the criticism stemming from the Congress party itself with Praveen Chakravarty, chairman Professionals’ Congress and Data Analytics, expressing reservation on BCG’s appointment for resource mobilisation.

Chakravarty posted on X that “if one wins elections by outsourcing core political functions to external fee-charging transactional consultants, then one also governs by outsourcing core policy functions to similar consultants.”

The Congressman, however, was quick to subsequently claim that his remarks were related to academic discourse and were not intended as a direct indictment of the Karnataka government’s decisions.

Siddaramaiah, however, remained firm in his resolve to appoint the BCG, arguing that the consultant was engaged to “find ways to mobilise resources and rationalise expenditure, in addition to devising strategies to enhance non-tax revenue, promote state-led urbanisation for value creation”.

According to ‘Money Control’, the BCG will identify initiatives to boost both tax and non tax revenues, in addition to trimming expenses and encouraging public private partnerships to plug leakages. It will also study irrigation, energy, public works and rural development segments, and explore new sources of revenue including mining and forests.

Meanwhile, M. B. Patil, State Minister for Industries, slammed the BJP, maintaining that the Central government under Prime Minister Narendra Modi, had also engaged BCG for national strategic initiatives which included preparation of the ‘Vision 2047’ document.

These controversies apart, Siddaramaiah has another headache to tackle as the government employees are pressuring him to implement the recommendations of the Seventh Pay Commission. In the event the Commission’s suggestions are implemented, the minimum salary of a government employee would jump from Rs 17,000 to Rs 27,000.