Popularism On Rise In Both BJP And Congress Ruled States, Says Jefferies

Election Driven Populism Surge: Jefferies's analysis regarding the budgets of six major states—both BJP and Congress ruled—that had elections either in the last 12 months or the next 6 months has a more populist approach. These states can expect a rise in their fiscal deficit from 2.4% in fiscal 2023 to 3.3% in fiscal 2025. Also, non-capital expenditure can see a rise of 1.3 percentage points of GDP to 15.1% in financial year 2025.

Maharashtra's Budget Turns Populist: As elections are set to take place in Maharashtra in 2024, it witnessed a loss for the ruling BJP coalition during the national elections. The government introduced a populist budget in June, which included a Rs 46,000 crore monthly income transfer scheme for women, an electricity bill waiver for 44 lakh farmers, a Rs 10,000 crore apprenticeship scheme for unemployed youth, and three free cooking gas cylinders per year, among others.

Congress' Welfare 'Guarantees'. The Congress party clinched a victory in Karnataka during the elections in 2023 with five guarantees. It included a monthly transfer of Rs 2,000 and free bus travel for women. The budget for these promises is estimated at Rs 53,700 crore in fiscal 2025. This indicates a 63% increase year-over-year. Congress assigned Rs 56,600 crore for six guarantees during Telangana's interim budget in February 2024. This includes a monthly income transfer of Rs 2,500 to women and an annual income transfer of Rs 12,000–15,000 to farmers.

Other BJP States Seeing Welfare Spend Up move: In Madhya Pradesh, Rs 36,500 crore budget is allocated for fiscal 2025 in regards to the women income transfer scheme introduced in fiscal 2024. Chhattisgarh's new BJP government also introduced a Rs 10,000 crore income transfer scheme for 25 lakh rice farmers in its Feb. 24 budget, along with other schemes introduced by BJP ruled states.