The Freebies Culture- How Maharashtra Compromised Its Fiscal Health For Political Favour!

In the grand theater of Indian democracy, where election seasons breathes fresh air with promises like monsoon flowers, Maharashtra—once the crown jewel of India’s economy—finds itself in a peculiar predicament. A part of India that once celebrated Bollywood glamour, industry giants, and enormous sugar cooperatives is now choking under a pile of debt. Why and what happened? How did Maharashtra, India’s economic superpower, wind up with torn pockets?

Lets dive deep down to know this financial tragic comedy together, where one will understand and remember that sometimes, there’s no such thing as a free lunch—especially when it’s being served by politicians.

What Is The Price Tag of Democracy?

Democracy, that we proudly celebrate, comes with its own costs that extend far beyond the esteemed ballot box. While we put our focus on election expenditures and logistics, a more hidden financial loss is slowly revealing: an aggressive flood of “freebies” promised by political parties desperate for votes.

Maharashtra is now facing the dark effects of electoral freebies. The state’s debt has risen to ₹9.3 lakh crore, with a revenue deficit of ₹45,891 crore in 2025-26. This financial pain has left the government with little space for freebie scheme. The much-touted increases in stipends for the Mukhya Mantri Majhi Ladki Bahin Yojana—promised to rise from ₹1,500 to ₹2,100 monthly—and the anticipated farm loan waivers remain in limbo, as victims of fiscal reality.

The current budget represents a retreat into pragmatism, focusing on maintaining existing schemes while attempting to keep debt and fiscal deficit within manageable limits. The Ladki Bahin plan, formerly considered the ‘hukum ka ikka’ of political freebies, has had its beneficiary list examined and cut down, with an expected allocation of ₹36,000 crore for 2025-26, a whole ₹10,000 crore less than the previous year. Regardless of the financial situation, political imperatives continue to dictate budget decisions.

To help reduce the budget disorder, the government introduced additional taxes on motor vehicles, expected to raise ₹1,125 crore in revenue. Some transactions are now subject to higher stamp duty.

The estimated debt is ₹2 lakh crore greater than in 2024-25, when it was ₹7.1 lakh crore, nearly 3X what it was just a decade earlier, indicating clear financial trouble.  The revenue gap has more than doubled from last year’s forecast of ₹20,051 crore.

Maharashtra isn’t the sole case; Freebies Are A National Phenomenon

Maharashtra’s predicament isn’t an isolated case. As India voted for the 18th Lok Sabha and eight assembly polls in 2024, political parties engaged in a competitive dance of giveaways.

The list of promises was extensive:

• Pensions for women.
• Free bus travel for women.
• Loan waivers for small and medium traders.
• Monthly unemployment allowances.

While these promises may have propelled parties to power, the growing financial burden has delivered a sobering reality check.

The Reserve Bank of India sounded alarms in December last year, cautioning that state subsidies like farm loan waivers, free power and transport, and subsidized services could crowd out critical resources needed for social and economic infrastructure. The report highlighted a concerning trend: sharp increases in subsidy expenditures driven by farm loan waivers, free or subsidized services, and direct cash transfers to farmers, youth, and women.

“States need to contain and rationalize their subsidy out flows so that such spending does not crowd out more productive expenditure,” the RBI advised—a financial equivalent of a parent reminding children that money doesn’t grow on trees.

Now, Since There Are Torn Pockets, Hence We Can See The Great Political Uno Reverse

After the electoral confetti settles and the victory speeches conclude, reality invariably sets in. Most state governments have become dependent on “revdis” (sweets, a term now synonymous with freebies in Indian political discourse)—free power, farm loan waivers, free transport, gas cylinders, and various forms of financial aid. As these costs accumulate, fiscal deficits widen, forcing states to adjust capital expenditure and revenue allocations.

Recent months have seen Maharashtra, Madhya Pradesh, Rajasthan, Telangana, Tamil Nadu, and Odisha revising their budgets to accommodate this unsustainable trend. Punjab, Kerala, and Karnataka face acute fiscal distress due to excessive welfare spending, while Rajasthan, Uttar Pradesh, and West Bengal grapple with mounting subsidy burdens.

Consider Punjab, where the Aam Aadmi Party (AAP) has failed to deliver on its promise of ₹1,000 monthly payments to women, even after three years in power. Implementing the pledged ₹1,100 monthly allowance would require mobilizing approximately ₹1,000 crore per month to cover all women aged over 18—translating to ₹12,000 crore annually. With Punjab’s debt projected to reach ₹3.74 lakh crore by the end of the 2024-25 fiscal year—more than 46% of the state’s total gross domestic product—the financial arithmetic simply doesn’t add up. A substantial portion of government borrowing goes towards debt servicing and routine expenses, leaving little room for new welfare schemes.

In Himachal Pradesh, Chief Minister Sukhvinder Sukhu took the unusual step of voluntarily surrendering his free electricity subsidy of 125 units on January 1, urging self-reliant individuals to follow suit. This appeal aims to benefit the state electricity board by ₹200 crore. The Congress, which assumed power in December 2022, has been navigating severe financial bloodbaths, carefully reviewing beneficiary lists for various schemes. Though the party had promised ₹1,500 monthly pensions for women, the implemented scheme restricts eligibility to women whose families aren’t already receiving pensions.

Even the BJP, which had previously spoken against the “revdi culture,” has undergone a noticeable drift! The saffron party now announced various welfare measures, aka freebies in Delhi and Maharashtra. From the popular “Ladli Behna” scheme—considered a winning formula—to free electricity, the Finance Minister has insisted that such measures are offered only after careful assessment of a state’s fiscal strength. However, recent statistics tell a different story.

It’s not as though governments were unaware of the potential consequences of “free ki revdi.” Yet, overconfidence seems to cloud judgment, as evidenced by the stance of our esteemed Finance Minister.

The Reality- When “Ladli Behna” Becomes “Ignored Behna”

The Ladli Behna scheme proved transformative for the BJP in last year’s elections, but state governments now face severe financial strain from this and other electoral promises. Less than a month after the new Maharashtra government’s inauguration, state women and child development minister Aditi Tatkare announced that women already listed under Namo Shetkari and direct benefits schemes would no longer be eligible for the Ladki Bahin Yojana—a scheme promising ₹2,100 as pension to women above 18 years that helped the Mahayuti alliance secure power. Early estimates suggest this adjustment will reduce the 2.63-crore beneficiary list by 20 lakh.

Following Maharashtra’s lead, the Madhya Pradesh government recently announced a reduction in allocation for the Laadli Behna scheme to ₹18,669 crore for FY26, down from ₹18,984 crore in FY25. Launched in May 2023, this scheme initially provided assistance of ₹1,000 to married women between 21 and 60 years of age, later increased to ₹1,250 per month.

In August alone, the Madhya Pradesh government borrowed ₹10,000 crore in four equal installments. In the previous fiscal year, MP borrowed ₹76,230 crore according to revised budget estimates, bringing its total debt to ₹4,18,056 crore. The BJP government plans to borrow an additional ₹94,431 crore this fiscal year.

The state has allocated ₹18,984 crore for the Ladli Behna scheme this year, alongside ₹4,775 crore for agriculture pump subsidies, ₹3,500 crore for offering 100 units of electricity at ₹100, ₹6,290 crore for electricity subsidies to farmers, and ₹1,231 crore for the Ladli Laxmi scheme for girls. These subsidies and direct cash transfers total ₹34,780 crore. The state has also budgeted ₹1,17,945 crore for salaries, pensions, and interest payments on loans.

With a projected fiscal deficit of 4.1% of the state GDP—exceeding the central government’s recommended 3.5%—Deputy Chief Minister Jagdish Devda has pledged efforts to bring the deficit back within prescribed limits.

Observing the situations in financial powerhouse Maharashtra and “Heart of Incredible India” Madhya Pradesh, it appears that once elections conclude, the “Laadli bahin” (beloved sister) is no longer so beloved! Perhaps this reflects the inherent nature of elections: secure votes, then conveniently forget promises.

In October 2024, Andhra Pradesh Chief Minister N. Chandrababu Naidu admitted struggling to implement the “Super Six” promises made during the assembly election campaign due to financial constraints. These promises included increasing monthly pensions from ₹3,000 to ₹4,000, along with a backlog payment of ₹3,000 (₹1,000 each for April, May, and June) starting in July. This would cost the state treasury ₹4,500 crore in July alone, in addition to employee and pensioner salaries estimated at another ₹6,000 crore.

Nothing Is Sudden; There Were Warning Bells Ahead, But No One Heeded

Warnings about this unsustainable path have largely gone unheeded. In February, the Supreme Court criticized the freebie culture, arguing that it discourages work and distorts economic incentives.

What Does The Apex Court Said About Freebie Culture?

Last month, the Supreme Court deprecated the practice of political parties promising “freebies” just before elections, pointedly asking, “Are we not creating a class of parasites?” instead of bringing people into the mainstream to contribute toward national development. The bench of Justices B.R. Gavai and Augustine George Masih observed that people were increasingly unwilling to work because they received free rations and money.

“Rather than promoting them to be a part of the mainstream of society by contributing to the development of the nation, are we not creating a class of parasites?” Justice Gavai asked. He continued, “Unfortunately, because of these freebies, which just on the anvil of elections are declared, like ‘Ladki Bahin’ and other schemes, people are not willing to work.“

During a hearing concerning homeless persons’ right to shelter in urban areas, the bench noted that people received free rations and money without working. Justice Gavai remarked, “Because of the freebies in Maharashtra which they just announced prior to elections, agriculturists are not getting laborers.“

This judicial observation coincides with an intriguing comment from Shantanu Deshpande, head of Bombay Shaving Company, who noted on LinkedIn that most Indian employees would opt out of work entirely if their financial needs were met. Is this the first step toward “creating parasites”?

Also, in the RBI’s report, “State Finances: A Study of Budgets of 2024-25,” urged states to redirect subsidies toward productive investments in health, education, agriculture, and infrastructure to ensure long-term economic stability.

It seems both the apex court and apex bank of the nation wanted both political parties and voters to break this election-induced cycle of short-term gratification that comes at the expense of long-term prosperity.

The Middle Class- Who Bears the Burden of Freebies

Everyone loves receiving gifts. This principle drives businesses building customer bases or encouraging existing customers to spend more. It also defines elections in India, where political parties promise schemes and incentives worth thousands of crores of rupees to attract votes—ultimately funded by taxpayers.

As governments implement welfare schemes and freebies for various segments, a crucial question often remains unasked: who really pays for all these freebies? Mumbai-based author and strategist Deepak Ghadge points to everyday price increases, such as the recent ₹100 hike in Shivneri bus fares between Mumbai and Pune, as hidden costs shouldered predominantly by the middle class.

“In the budget, there was this big announcement of approx ₹1 lakh plus tax savings to the middle class. But the government has already taken ₹12,000 from me by merely increasing the fare by ₹100,” he wrote in a LinkedIn post.

Ghadge argues that while welfare schemes aim to help certain populations, the burden of funding them is quietly distributed through small but cumulative price increases that impact daily life.

Sharing his personal experience, Ghadge writes, “I travel to Mumbai to Pune very often. Every week. I generally take the Shivneri bus run by MSRTC—it’s fast and decent, mostly they are on time.”

But a recent journey came with an unexpected cost. “My ticket used to be ₹610 one side vs private bus fare of ₹400—already a 50% difference. To my surprise, I was asked to pay ₹700. I asked the conductor why the fare is so high? He said the fare has been increased by 15%.”

He points out, “A 15% hike is twice the inflation rate, and when you are already charging a 50% premium compared to private players.” The conductor’s response was straightforward: “We can’t do anything, it’s the government’s decision.”

Ghadge breaks down the financial implications:

• 40 seats per bus, ₹100 more per ticket
• 4 trips a day = ₹16,000 extra per bus per day
• 3,500 buses in operation = ₹5.6 crore additional daily revenue
• Across 300 days, that’s ₹1,680 crore annually

Yet passengers receive no added benefit. “By giving ₹100 more, I am not reaching 45 minutes earlier. I still take the same time. I am not served any soft drinks or tea or coffee,” Ghadge writes.

He warns these “small hikes” are becoming an invisible tax on the middle class, funding freebie schemes. “Don’t fall or vote for freebies because we only pay for it. Don’t promise freebies—instead, build infrastructure, skill, entrepreneurial ecosystem, create jobs and markets.”

Ghadge highlights the broader tax burden: “Today we are paying on average 12 to 18% GST on all goods and services we consume, on top of income tax. Either we should slash tax percentages or abolish income tax. More taxpayers would mean more money for development.”

The Final Accounting

The year 2025 began with high-stakes electoral battles in Delhi—poised once again to witness a “Mahabharat of freebies.” But voters consistently fail to read the fine print. For the first time in 31 years, Delhi is projected to slip into a revenue deficit by the end of 2024-25.

Elections in India represent a celebration of irrational exuberance, loose talk, and mindless populism. In contrast, public finance needs both caution and insight. The basic difficulty of democracy is that the same people who run for office also control the government’s finances. The rising popularity of freebie culture added to the problem in recent years.

As Maharashtra’s tragic experience shows, fiscal health cannot be compromised permanently for freebies or any kind of political advantage. The state that once led India’s economic drive now can be studied as a cautionary tale, reminding us that even the richest governments cannot continue free lunch politics permanently. The bill always comes due, and it is rarely the politicians who promised the feast who are responsible for paying for it.