From Bikes to Cash: India’s Election Spending Soars

Published: 18 November 2025 Tuesday. The English Chronicle Desk. The English Chronicle Online

India’s election season has long been powered by handouts, but the rising scale and cost of these freebies is raising serious questions about the financial sustainability of state governments. From bicycles and televisions to cash transfers, election promises are increasingly blurring the line between welfare measures and pre-poll populism in the world’s largest democracy.

In recent years, cash transfers targeted at women have emerged as a particularly effective tool for political parties. The sweeping victory last week in the eastern state of Bihar, one of India’s poorest regions, is being partly attributed to a 10,000 rupee ($112; £85.18) cash handout to women. A record number of women turned out to vote, highlighting the impact of such financial incentives on electoral outcomes.

Similar schemes have been rolled out by the ruling Bharatiya Janata Party (BJP) in states like Maharashtra, and opposition parties have promised comparable initiatives in upcoming elections. Economists such as Jean Drèze argue that these handouts, while controversial, often represent the only way for the poor to extract tangible promises from political representatives. He notes that distinguishing between “useful” and “wasteful” handouts is essential, but without such electoral leverage, many vulnerable communities might receive nothing at all.

At the same time, critics warn of the dangers of a “revdi culture,” a term Prime Minister Narendra Modi has used to describe the frivolous distribution of sweets or handouts to win votes. India’s top court also intervened in 2023, attempting to curb “irrational freebies” during elections. Yet, the practice continues to dominate the political landscape, often straining state finances.

Research from brokerage Emkay Global highlights the fiscal pressure faced by states like Bihar, where the deficit—the gap between revenue and expenditure—stands at 6% of the state’s GDP. Pre-election schemes amounted to 4% of GDP, exceeding capital expenditure that could have been used for long-term development projects. Even fiscally prudent states are reportedly being drawn into this “freebie economics,” with 21 out of 29 Indian states exceeding the 3% deficit-to-GDP ceiling due, in part, to election-driven spending.

The Ladki Bahin (Beloved Sister) scheme in Maharashtra illustrates the unsustainability of such measures. The cash transfers led to a 0.4% increase in the state’s deficit, forcing the government to roll back some promises once the elections concluded. India’s central bank, the Reserve Bank of India (RBI), has warned of the growing burden of subsidies on state-level debt, noting that while overall state debt declined to 28.5% of GDP by March 2024, it remains above the recommended 20% threshold. The RBI has highlighted that rising expenditures on subsidies—including farm loan waivers, free services, and cash transfers to farmers, youth, and women—pose a risk to productive public investment.

The broader impact of election freebies extends beyond state budgets. With private investment in job-creating industries lagging, and governments constrained in infrastructure spending, political leaders increasingly rely on tax cuts and giveaways to stimulate consumption. However, with the visible success of schemes in Bihar, the incentive to continue this cycle of pre-election largesse remains high.

Economists from Emkay Global note that the pattern is likely to persist in upcoming elections in states such as Tamil Nadu, Kerala, and West Bengal. They warn that unless reforms are implemented, India may witness an ongoing “race to the bottom,” where states compete to offer increasingly unaffordable benefits to secure votes.

The debate over election freebies highlights a fundamental tension in Indian politics: the need to address poverty and promote welfare while ensuring fiscal responsibility and long-term economic development. As election season continues to drive the growth of such populist measures, the challenge for India’s states will be balancing immediate political gains with sustainable financial planning.

This news has been carefully compiled from verified social media sources, international and UK-based news outlets, and cross-checked with detailed online data. It is presented with professionalism, impartiality, and a human-centred narrative, providing readers with an engaging, in-depth look at the political and economic implications of election freebies in India.