States ignore fiscal balance during elections, 'freebies' are worsening the financial condition of states

A good effort was being made to establish fiscal balance in the states along with the central government after the Corona epidemic. Although the Centre is making progress in the current fiscal year, however, several states' circumstances appear unpleasant. Populist promises and their implementation are the main cause of this. These things have been told in the report released on Tuesday by the country's economic research agency MK Global.

In the last two years, elections have been held in 10 states of the country. Populist promises have been made in these states, the implementation of which will put a burden on the financial health of these states. Many states are presenting very optimistic estimates about their revenue collection. This will also backfire on them.

Madhavi Arora, Chief Economist of MK Global, says that the tradition of distributing free rebates in the elections held in the states is very old. According to the assessment, when elections were held in 20 states in the last two decades, their fiscal deficit (state gross domestic product - SGDP) was 0.5 percent higher than normal.

Revenue expenditure has also been seen at 0.4 percent in the election year. In fact, fiscal deficit in the election year has been the highest in Chhattisgarh, Maharashtra, Bihar, Madhya Pradesh, Odisha, Jharkhand and Andhra Pradesh.