Bihar Election Promises and Economic Implications 2025

As Bihar approaches its Assembly election in 2025, political parties have revealed ambitious welfare promises. The ruling coalition offers 125 free electricity units per household. The opposition pledges 200 free units plus a government job for one family member. These pledges reflect the deep-rooted culture of election-time freebies in India. This phenomenon has expanded from southern States to the entire country. Immediate relief is the aim, but the long-term economic impact raises concerns.

Election-Time Freebies in India

Election freebies began with subsidised goods like rice and televisions in southern India. Over time, this strategy spread nationwide. Parties use freebies to gain voter trust and secure votes. While politically effective, such giveaways strain State finances. Bihar, dependent on Central funds and with low tax revenue, faces acute fiscal pressure. Funds spent on freebies reduce resources for infrastructure and development.

Economic Trade-Offs of Subsidies

Heavy subsidies can delay investments that create jobs and income. Bihar struggles with industrialisation and high migration rates. Subsidies may provide short-term relief but do not address structural issues. Free electricity benefits both rich and poor, diluting its impact on poverty reduction. Fiscal deficits rise as States borrow more to fund giveaways, reducing capital expenditure and slowing growth.

Efficiency and Welfare Delivery

Past welfare schemes suffered from leakages, with up to 40% benefits not reaching the poor. Direct Benefit Transfers (DBT) have improved efficiency and saved large sums nationally. Bihar still needs to improve targeting to ensure aid reaches the needy. Welfare schemes like MGNREGS, pensions, and scholarships provide essential support. However, populist freebies differ from welfare by offering temporary relief without building capacity.

Focus on Skill Development and Targeted Subsidies

Long-term growth depends on investing in people. Bihar’s young population needs skills, credit access, and confidence. Current vocational and microenterprise programmes are too limited. Expanding these initiatives can create sustainable opportunities. Targeted subsidies in health and education yield better growth impacts than universal freebies like free electricity. Such investments empower rather than create dependence.

Fiscal Prudence and Sustainable Growth

Excessive spending on freebies leads to increased borrowing. This reduces funds available for infrastructure and job-creating projects. Promises of government jobs for all are neither fiscally feasible nor economically productive without private sector growth. Bihar’s future depends on balancing welfare support with fiscal responsibility to stimulate employment and economic development.

Voter Awareness and Accountability

Voters are increasingly demanding accountability beyond freebies. Questions about sustainability and funding are gaining importance. Many young voters prefer job creation over temporary relief. Political promises must be scrutinised for long-term viability. Empowering citizens through opportunity rather than dependence is becoming a key electoral issue.

Questions for UPSC:

1. Critically discuss the economic and social implications of election-time freebies in Indian States with special reference to Bihar.
2. Analyse the role of Direct Benefit Transfers in improving welfare delivery and reducing leakages in India’s subsidy programmes.
3. Examine the challenges and opportunities in skill development and vocational training for youth employment in Bihar and similar States.
4. Point out the fiscal constraints faced by Indian States in balancing welfare expenditures and capital investment. Estimate the impact on economic growth.

Answer Hints:

1. Critically discuss the economic and social implications of election-time freebies in Indian States with special reference to Bihar.

1. Freebies provide immediate relief and political gains but strain State finances, especially in fiscally weak States like Bihar.
2. Bihar relies heavily on Central transfers with limited tax revenue, making freebies costly and unsustainable.
3. Subsidies often benefit all sections, including the rich, diluting poverty alleviation impact.
4. Excessive freebies divert funds from critical infrastructure, education, and health investments.
5. Socially, freebies may create voter dependence and reduce incentives for self-reliance and productivity.
6. However, essential welfare schemes differ from populist giveaways by building security rather than temporary relief.

2. Analyse the role of Direct Benefit Transfers in improving welfare delivery and reducing leakages in India’s subsidy programmes.

1. DBT channels subsidies directly to beneficiaries, reducing intermediaries and corruption.
2. Nationally, DBT has saved the government approximately ₹3.5 lakh crore by minimizing leakages.
3. Earlier studies showed up to 40% of food subsidies failed to reach the poor due to leakages.
4. Bihar still needs to improve DBT coverage and targeting to ensure aid reaches the truly needy.
5. DBT enhances transparency, accountability, and efficiency in welfare delivery.
6. Effective DBT implementation supports fiscal prudence by reducing wastage and misuse of funds.

3. Examine the challenges and opportunities in skill development and vocational training for youth employment in Bihar and similar States.

1. Bihar has one of India’s youngest populations, creating high demand for employment-oriented skills.
2. Current vocational and microenterprise initiatives are insufficient in scale and reach.
3. Challenges include limited infrastructure, funding, and access to credit for youth entrepreneurship.
4. Expanding skill development can reduce migration by creating local job opportunities.
5. Targeted training aligned with market needs can enhance employability and economic growth.
6. Opportunities exist to leverage government schemes and private sector partnerships for scaling up programs.

4. Point out the fiscal constraints faced by Indian States in balancing welfare expenditures and capital investment. Estimate the impact on economic growth.

1. States like Bihar have limited tax bases and depend heavily on Central transfers, restricting fiscal space.
2. High welfare spending reduces funds available for capital expenditure on infrastructure and industrialisation.
3. Increased borrowing to finance freebies raises debt burden and interest costs, crowding out growth-oriented spending.
4. Reduced capital investment slows job creation and long-term economic development.
5. Unsustainable welfare promises (e.g., universal government jobs) are fiscally unviable without private sector growth.
6. Balanced fiscal management is crucial to ensure welfare does not compromise future growth prospects.