Prashant Saxena

Political parties over the years have perfected the art of 'selling revri' without realising the financial burden. Result: Spiraling state debts

When Aam Aadmi Party went to the polls in Punjab early this year, it promised 300 units of free electricity every month. It also promised Rs 1,000 to every woman in the state. The two schemes are likely to put an additional financial burden of at least Rs 20,600 crore on the state, government officials have said.

The free electricity up to 300 units scheme is expected to add around Rs 1,502 crore to the subsidy bill.

Punjab is not alone in the race for distributing free sops to voters. 

In Andhra Pradesh, the AP Electricity Regulatory Commission (APERC) fixed a tariff of Rs 5.73 per unit on average for agriculture power supply. However, there will not be any burden on the farmers as the government will bear the entire expenditure in the form of a subsidy, according to an official release.

Punjab's debt burden is one of the highest in the country at Rs 2.82 lakh crore, as per government records. The public debt of Andhra Pradesh hit Rs 3.89-lakh crore in the financial year 2021-22, registering an increase of almost Rs 40,000 crore compared to the previous year, accounting for 32.4 per cent of the Gross State Domestic Product.

There are other states as well where the state subsidy bill is far more than the limit set by the Reserve Bank of India in the form of debt-to-GSDP ratio.

When political parties promise freebies, they are aware of the kind of financial burden they would cause to the public exchequer. Yet they have to win elections.

So, would it not be fair to ask them that since a political party has promised a subsidy, why can't that party fund the freebie being sold to the people? Otherwise, it will be a simple plundering of limited resources by cutthroat politicians. The question is: why punish taxpayers?

A look at public funding to political parties could make some sense. According to an analysis by the Association for Democratic Reforms (ADR), five regional parties including the ruling DMK in Tamil Nadu and the ruling YSR-Congress in Andhra Pradesh received four-fifths of the incomes by way of political donations in 2020-21.

Thirty-one regional parties, whose filings with the Election Commission were analysed, had got an income of about Rs 530 crore during 2020-21. The DMK reported the highest income of about Rs 150 crore followed by the YSR-Congress (Rs 108 crore) and BJD (Rs 73 crore).

Then we have reports from the Election Commission of India (ECI), which say that the BJP continues to get the lion's share of donations among national parties. As per data from compliance reports for the 2020-21 financial year submitted to the ECI, the details of contributions greater than Rs 20,000, are called 'large donations.'

A media report said the BJP accounted for nearly 75 per cent of all large donations received by national parties in 2020-21. It received more than Rs 477 crore, more than six times the Rs 74 crore reported by the Congress party, which received the second highest large donations.

This is the eighth consecutive year that the BJP has reported the highest donations from individuals and business houses.

In all, the compliance reports of eight recognised national parties showed that they received more than Rs 633.66 crore during 2020-21 in donations larger than Rs 20,000. In FY 2019-20, an election year, the national parties declared that they had received more than Rs 1,000 crore in donations larger than Rs 20,000.

In a country where around eight crore people out of a population of 140 crore pay income tax — which is around six per cent of the total population — it is clear that tax funds go more to people who don't pay taxes at all.

It would also appear that the tax net over the years has not grown much. So, you have a situation where only a limited number of people help feed the growing number of those who do not or cannot pay taxes.

The figures come directly from the Finance Minister's reply in the Rajya Sabha this March.

Now, take a look at our subsidy burden. The combined food and fertiliser subsidy bill in the revised estimates for 2020-21 was a massive Rs 556,565 crore, representing 16.1 per cent of the Centre's entire Budget.

As many as 27 states and Union Territories out of 36 are providing subsidised electricity to consumers, with at least ₹1.32 trillion spent nationwide in the 2020-21 financial year alone, power ministry data show. Madhya Pradesh, Rajasthan and Karnataka footed the highest power subsidy bill, accounting for Rs 48,248 crore or 36.4 per cent.

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