State governments have begun presenting their annual budgets on the heels of the union budget. When state budgets are juxtaposed with a few other measures announced by these governments, what we are witnessing is a reckless variety of populism. The latest example is that of Assam’s BJP government, which in its budget promised gold for brides from families with annual income less than Rs 5 lakh. This is perhaps the most unproductive allocation of public resources possible at a time when there is a jobs crisis, compounded by a mismatch between job seekers and the skill requirements of employers.
It’s not an exaggeration to say governments have set aside the demanding tasks of improving the quality of human capital or encouraging labour intensive industrialisation. The emphasis is on redistributing public resources to earmarked constituencies. All of this comes at a cost. All levels of government have begun to source resources from outside the main budget. This is an opaque way of functioning, characterised by weak checks and balances. Therefore, we are in a phase where fiscal pressures are increasing in a system short of transparency.
One solution is to take the suggestion of the last finance commission to have an independent fiscal office which provides information on the true state of affairs. In a democracy independent institutions provide a check to the short-termism of governments intent on winning the next elections by hook or by crook, no matter what long-term damage they cause.
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