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@Evening: 🫥 In Karnataka, A Clue For How Congress Will Try To Remain Relevant, And It's Not Looking Good
The Karnataka outcome tells us about the approach that the Congress may be taking to remain a political force — and how it is damaging.
Context: The party sought power in Karnataka through a slew of welfarist promises. Now that it has won the mandate, the Congress is getting ready to wreck the finances of the state for its own gain.
Writing for Swarajya, Venu Gopal Narayanan has likened the Congress approach in Karnataka to "AAP-level recklessness."
It risks turning one of India’s richest, most industrialised states into a fiscal mess of apocalyptic proportions.
'Freebie-Nataka': The Congress has promised monthly cash handouts to homemakers and unemployed youth. Let's look at some promises:
Women will get to ride on public transport for free.
Fishermen will be given 500 litres of tax-free diesel and Rs 6,000 per month during the lean season.
Loans up to Rs 1 lakh will be waived for sheep and goat rearers.
The subsidy on milk will be raised by 40 per cent for dairy farmers.
Every home will get 200 units of free electricity.
Ten per cent of the college fee for any government school student who wins a seat in a competitive exam... ‘in any college in India’.
Subsidies for housing projects to be increased by Rs 3.5 lakh.
Rs 150-300 for children of SC/ST/OBC/minority community every month (the bulk of the state’s population!) as an incentive to stay in school.
The cost of all that? A leading economic paper estimates that the freebies would amount to over Rs 62,000 crore annually.
Other calculations show that the subsidy cost of 200 units of power to each household alone would be around Rs 40,000 crore per annum.
If subsidies cut this heavily into state earnings, then it will be impossible to balance the book.
As a result, capital expenditure will fall.
What growth path would Karnataka be on, then?
The state will suffer. If this is the path that the Congress want to take:
Infra projects will start to hobble, and investments along with it.
The state’s liabilities will climb and drive Karnataka into a debt trap of AAP-like proportions before the end of this legislature’s term.
The Congress government might even exacerbate its reckless spending by tweaking labour laws to make them employer-unfriendly.
That would have a catastrophic impact on investment in the state.
This direction is regrettable and dangerous, both for Karnataka and India, as the state is a top economic power of the country.
Bottom line: Now that the Congress has the mandate, the implementation of their manifesto will come at a severe cost — to the aspirations of Kannadiga youth, the state treasury, and growth.
