Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster
  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Poll freebies to hurt govt. finances
Fri, 25 Apr Pre-Open

The nation is in the middle of the general elections and quite naturally; all political parties have been promising the moon to voters. The formal method is the official party manifesto in which the promises are laid out. The Indian voter has learnt to take these promises with a pinch of salt. However politicians never fail to come up with creative methods to lure voters.

One of these methods has been to distribute freebies like televisions and laptops using the taxpayer's money. Politicians of all hues have indulged in this sort of behavior when they have been in power, specifically at the state level. This technique is very tempting for political parties because they serve the purpose of instant gratification. Consider this: as per an article in Bloomberg, the All India Anna Dravida Munnetra Kazhagam (AIADMK) in Tamil Nadu spent more than Rs 160 bn since 2006 on handouts like TV sets for the poor! This was funded by the state exchequer. In its manifesto, the party has promised four goats, a cow, solar panels and cable TV for every poor house hold in the country if the party comes to power at the center. Not surprisingly, the main opposition party in the state supports these moves, having indulged in similar practices when it was in power.

These handouts are neither new nor are they limited to a few states. It is prevalent on a national scale. Political parties hope that these freebies will be remembered when elections come around. But the sad reality is that the poor family, who receives a TV set, does not have the electricity to turn it on. The handouts only end up straining the state government's finances. The money could have been far better spent on providing basic amenities like good roads, power, schools and sanitation facilities.

The courts and the election commission have been petitioned to ban such giveaways entirely. The reason is simple. These handouts are effectively bribes. Official government spending must be used for the benefit of the public at large. It cannot be targeted in such a fashion keeping elections in mind. We hope that this malpractice is brought to an end quickly as it not only affects voter behavior but it can also lead to a deficit risk for the country.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary

Equitymaster requests your view! Post a comment on "Poll freebies to hurt govt. finances". Click here!


Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms