New Delhi: After Corona, the efforts to establish fiscal balance were going well in the states as well as the central government. But during the current financial year, the Center is moving in the right direction but the situation of many states does not look good. A big reason behind this is populist promises and their implementation.

This has been stated in a report released on Tuesday by MK Global, a leading economic research agency of the country. In the last two years, elections have been held in ten states of the country and in all these states, very attractive populist promises have been made whose implementation will put a burden on the financial health of these states.

'The tradition of distributing free sweets during elections is an old one'

Also, there are many states which are presenting very optimistic estimates about their revenue collection. This too will backfire on them. MK Global's Chief Economist Madhavi Arora says that the tradition of distributing freebies during elections in Indian states is very old.

Our assessment shows that in the last two decades, when elections were held in 20 states, their fiscal deficit (compared to the state's gross domestic product - GDP) was 0.5 percent higher than normal. Whereas revenue expenditure has also been seen to increase by 0.4 percent in election years. Their assessment also shows that the highest fiscal deficit in election years has been in states like Chhattisgarh, Maharashtra, Bihar, Madhya Pradesh, Odisha, Jharkhand and Andhra Pradesh.

The notable fact is that elections are due again in many of these states by the end of next year 2025. Ms Arora's estimate shows that the combined subsidy bill of the states is said to be Rs 3.7 lakh crore in their budget for the year 2024-25.

The amount was given by the states during the Corona period

This is 8.6 to 8.7 percent of the total revenue collection of the states. Such a huge amount was given by the states as subsidy only in the year 2020-21 during the Corona period. The subsidy bill has increased by 26 percent in a year and this has happened only due to the announcements of free schemes. In such a situation, the report of MK Global also says that in the current situation, there is a possibility of more loans being taken by the states. The borrowing of the states is already increasing. This year it may increase by 8-10 percent. By the end of the financial year 2025, the total borrowing of the states is expected to be Rs 11 lakh crore, which will be 9 percent more than the previous financial year.