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Freebies Politics: Banking sector regulator Reserve Bank of India has raised concerns about state governments making populist announcements like loan waiver for farmers, free electricity and water, free bus rides for electoral gains. Have made it clear. RBI warned in its report that due to such populist announcements, the development of social and economic infrastructure may be affected.
RBI report on financial condition of states
The Reserve Bank of India on Thursday, December 19, 2024, released the State Finance: Study of Budgets of 2024-25 (State Finances: A Study of Budgets of 2024-25) A report has been issued in the name. In this report, RBI has said that many states have announced loan waiver for farmers. Apart from this, states have announced to provide free electricity for both agriculture and domestic purposes. According to RBI, free transport facility is also being provided in some states. Apart from this, apart from allowances to unemployed youth, help is also being given to women for the financial year 2024-25.
States should control subsidy expenditure: RBI
RBI has said in its report that this type of expenditure can affect the development of very key capabilities like social and economic infrastructure. Such populist announcements can affect the development of these things which are considered very important. In its report, RBI termed the burden of subsidy on the state exchequer as dangerous due to increased expenditure on items like loan waiver of farmers, free electricity to agriculture and households, free transport as well as cheap LPG cylinders, cash transfer to youth and women. Is. RBI has asked the states to control their subsidy expenditure and rationalize it so that there is no shortage of funds for expenditure on the development of social and economic infrastructure.
State power companies are in bad shape
RBI has also expressed concern in its report about the deteriorating financial condition of the electricity distribution companies (DISCOMs) of the states. According to RBI, the financial health of discoms remains a serious challenge for the financial condition of the states. Despite financial restructuring, the outstanding debt on power distribution companies of states has increased from Rs 4.2 lakh crore to Rs 6.8 lakh crore in 2022-23 with an increase of 8.7 per cent from 2016-17, which is 2.5 per cent of GDP.
Competition for populist announcements for election victory
In fact, in the last few years, populist announcements are being made on a large scale in the states to win the assembly elections, at the center of which are women, to get their votes, such announcements are being made in the states ruled by all the parties.
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