Popularism On Rise In Both BJP And Congress Ruled States, Says Jefferies
The surge in state-level popularism has cast doubt on the central government's upcoming July 23 budget.
(Long shot of Sansad Bhavan in New Delhi)
The heavy election calendar has led to a surge in popularism in both Bharatiya Janata Party and Congress ruled states, according to Jefferies. Major states that held their elections experienced a 25–45% rise in non-capital expenditures from fiscal 2023–2025, the brokerage said.
The surge in state-level popularism has cast doubt on the central government's upcoming July 23 budget. But it's expected that the centre has all the tools to satisfy all parties. The brokerage expects this trend to benefit the two-wheeler, telecom, quick-service restaurant, and footwear sectors.
The key findings are:
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.
