Liberal election promises could jeopardise Bihar’s fiscal health,curb productive spend

SEASON OF FREEBIES

- PRASANTA SAHU

IN THE RUN up to the assembly elections, Bihar government has announced a series of populist measures which could cost the state an additional =20,000-30,000 crore annually, depending on how these are implemented.

This is a considerable 1.8-2.7% of the state’s Gross State Domestic Product (GSDP).

Given that the state already had a high fiscal deficit of close to 6% of GSDP in FY25, it can hardly afford to implement all these measures without seriously undermining its fiscal health. Or else, spending will have to cut back on other heads and the biggest casualty could be capital expenditure.

Some of the major schemes announced by state chief minister Nitish Kumar include Mukhyamantri Mahila Udyami Yojana for women entrepreneurship with 10,000 seed capital each for self-employment. This scheme is targeted to benefit 12 million women and may cost the state exchequer a massive 12,000 crore per annum.