@Evening: 🫥 In Karnataka, A Clue For How Congress Will Try To Remain Relevant, And It's Not Looking Good

😟 Freebie-Nataka gone too far

The Karnataka outcome tells us about the approach that the Congress may be taking to remain a political force — and how it is damaging.

Context: The party sought power in Karnataka through a slew of welfarist promises. Now that it has won the mandate, the Congress is getting ready to wreck the finances of the state for its own gain.

• Writing for Swarajya, Venu Gopal Narayanan has likened the Congress approach in Karnataka to "AAP-level recklessness."

• It risks turning one of India’s richest, most industrialised states into a fiscal mess of apocalyptic proportions.

'Freebie-Nataka': The Congress has promised monthly cash handouts to homemakers and unemployed youth. Let's look at some promises:

• Women will get to ride on public transport for free.

• Fishermen will be given 500 litres of tax-free diesel and Rs 6,000 per month during the lean season.

• Loans up to Rs 1 lakh will be waived for sheep and goat rearers.

• The subsidy on milk will be raised by 40 per cent for dairy farmers.

• Every home will get 200 units of free electricity.

• Ten per cent of the college fee for any government school student who wins a seat in a competitive exam... ‘in any college in India’.

• Subsidies for housing projects to be increased by Rs 3.5 lakh.

• Rs 150-300 for children of SC/ST/OBC/minority community every month (the bulk of the state’s population!) as an incentive to stay in school.

• A welfare fund for journalists with seed money of Rs 500 crore. (Not an exhaustive list.)

The cost of all that? A leading economic paper estimates that the freebies would amount to over Rs 62,000 crore annually.

• Other calculations show that the subsidy cost of 200 units of power to each household alone would be around Rs 40,000 crore per annum.

• If subsidies cut this heavily into state earnings, then it will be impossible to balance the book.

• As a result, capital expenditure will fall.

• What growth path would Karnataka be on, then?

The state will suffer. If this is the path that the Congress want to take:

• Infra projects will start to hobble, and investments along with it.

• The state’s liabilities will climb and drive Karnataka into a debt trap of AAP-like proportions before the end of this legislature’s term.

• The Congress government might even exacerbate its reckless spending by tweaking labour laws to make them employer-unfriendly.

• That would have a catastrophic impact on investment in the state.

• This direction is regrettable and dangerous, both for Karnataka and India, as the state is a top economic power of the country.

Bottom line: Now that the Congress has the mandate, the implementation of their manifesto will come at a severe cost — to the aspirations of Kannadiga youth, the state treasury, and growth.