Bihar Election 2025: A Market Place of Freebies

Bihar's political landscape has once more transformed into a Bazar of promises, where economics bows to electoral aspirations. While the NDA showcases its initiatives aimed at women, Tejashwi Yadav responds with an unattainable promise of a "job for every family," leading governance to be overshadowed by superficial tactics. The electoral contest in Bihar has once again devolved into a competition over freebies, devoid of any substantive policy or governance achievements, thereby underscoring the state's fragile financial condition. Bihar's total debt has reached INR 2.85 lakh crore, with a debt-to-GSDP ratio of 33.42%, surpassing the Finance Commission's advised threshold of 32.57%. The per capita debt amounts to INR 21,773, and the state currently allocates INR 23,000 crore each year solely for interest payments. Additionally, the fiscal deficit, estimated at INR 29,000 crore, or 4.3% of GSDP, further highlights the pressures on Bihar's economy.

This election in Bihar marks one of the initial instances where the Nitish Kumar-led NDA government has significantly relied on the distribution of freebies and cash transfers, diverging from Kumar's typical strategy of fulfilling promises after the elections. On Monday, right before the implementation of the model code of conduct, he disbursed INR 10,000 to each of the 21 lakh women participating in the Mukhyamantri Mahila Rojgar Yojana

The NDA, spearheaded by the BJP and Chief Minister Nitish Kumar, has committed to providing INR 10,000 to 1.21 crore women through the Mukhyamantri Mahila Rozgar Yojana, along with monthly pensions of INR 1,100 for widows and the elderly, INR 1,000 for unemployed youth, and free electricity as well as devices such as tablets and mobiles for community workers. The total estimated expenditure for these initiatives is INR 33,000 crore, which is equivalent to the entire capital expenditure budget of Bihar. Economists have cautioned that this would leave the government with minimal funds available for development, criticizing the BJP for deviating from its previous position against providing freebies

In contrast, the Mahagathbandhan, led by the Rashtriya Janata Dal (RJD), has escalated its promises with even more ambitious proposals. RJD leader Tejashwi Yadav has promised INR 30,000 in monthly salaries for Jivika workers, permanent government employment for one member of each family, and INR 1,500 in monthly pensions for the elderly and disabled, in addition to loan waivers and insurance coverage of up to INR 5 lakh.

Bihar's economic growth is primarily driven by consumption rather than investment. Bihar is characterised as state of contractors rather than true entrepreneurs. Consequently, the current distribution of freebies can be described as "a compensatory, electronically tied populism," which lacks a connection to the developmental framework that the economy necessitates. Meeting the RJD’s commitment to provide 2 crore government jobs at a base salary of INR 3 lakh per employee annually would inflate Bihar’s salary expenditure to INR 6 lakh crore—twice the state’s existing budget and comparable to India’s defense budget. The current budget of the state would be inadequate to meet these commitments, leaving no funds available for long-term development initiatives.

Ultimately, it is the funds of the taxpayer that would be utilised. Regardless of who assumes power, a crisis concerning natural resources is inevitable, and the financial condition of the States is already in a lamentable state.

Prof Mithilesh Kumar Sinha

Department of Economics

Nagaland University, Lumami