State elections 2023: EC should ask parties to estimate the cost of freebies, says RBI's Ashima Goyal

A day after the Election Commission of India (ECI) said that there has been a seven-fold increase in terms of election freebies, Ashima Goyal, a member of the Reserve Bank of India's Monetary Policy Committee (MPC), said the poll body should make it mandatory for political parties to give an estimate of the freebies offered to the voters ahead of elections.

It is to be noted that EC said that drugs, cash, freebies, liquor and precious metals worth over Rs 1,760 crore have been seized from the five states where Assembly elections are underway,  which is a record seven times more as compared to the polls in 2018.

Assembly elections have already been held in Madhya Pradesh, Chhattisgarh and Mizoram. Rajasthan will go for polls on November 25m while Telangana will go on November 30.

The commission further said that seizures worth over Rs 1,400 crore were made in the past six State Assembly elections held in Gujarat, Himachal Pradesh, Nagaland, Meghalaya, Tripura and Karnataka, 11 times more that were made in the previous assembly polls in these states.

Speaking about the states' fiscal health, MPC's Goyal said political parties have been making a lot of promises to voters that have raised concerns about the overall economy.

In a recent column in Hindu Business Line, Goyal said: "ECI can help voters understand that freebies are never free by asking parties to estimate costs of schemes and also announce what tax will rise."

She said: "For example, estimates of poll promises by the current Uttarakhand government put them at such a large share of revenues that a cut in capex and the quality of public services is inevitable. This would degrade state facilities and lock those getting subsidies in a cycle of poverty and dependence. Voters must see through short-term gains. It is also a race to the bottom that does help parties get re-elected since other parties are forced to compete in offering such sops if they work in some elections."

"Central incentives such as interest-free loans conditional on capex have induced a double-digit rise in States’ capital spending over the last two years," she said.

"Better measurement will enable the imposition of PAYGO rules, so that a new scheme can be announced only if the funding for it is shown," Goyal said.

PAYGO, which stands for “pay as you go,” is a budget rule adopted in the United States that includes planning of financing expenditures with funds that are currently available rather than borrowed or expected in future. This also includes tax cuts or cuts in mandatory spending.

It is to be noted that Lok Sabha elections are due next year. '

Goyal further said that India should take steps to cut its debt share, which stands at 28 per cent.

"Debt varies widely across States but borrowing costs are the same unlike in other countries. Indian subnational debt share at 28 per cent is the 4th highest in the world and should come down. The OECD average is 20 per cent. Politicians must be forced to think of development not just the next elections, she said.

Last month, the Supreme Court issued notice to the Madhya Pradesh and Rajasthan governments, the central government and the Election Commission (EC) on a plea seeking comprehensive guidelines to bar political parties from distributing cash and other freebies at the expense of taxpayers. The court sought a response from them within four weeks.

A division bench comprising Chief Justice DY Chandrachud and Justices JB Pardiwala issued a notice and tagged the case with an already pending matter on freebies.

The petitioner, social worker Bhattulal Jain, noted that freebies such as tablets were being distributed "six months" before the elections and the state governments were calling it a public interest. He asserted that states are in huge debt and freebies should not be distributed.

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