Freebies and Financial Mess – The Cost of Populism

Freebies and Financial Mess – The Cost of Populism by Upendra examines how West Bengal’s economy has suffered under Freebie culture

In 2011, when the CPIM government lost power in West Bengal they left behind a debt of around Rs 1.75 lakh crores. Over the 15 years the Trinamool Congress (TMC) has added another Rs 6.25 lakh crores to this debt. Today the total debt of West Bengal is around Rs 7.75- Rs 8 lakh cr­­ores. Institutionalised fiscal mismanagement, has today turned West Bengal into what many economists call a “financial hell-hole”, where public resources go to die a slow and painful death by freebies. Public money is being wasted on things that do not help the state in the long run.

With the Bharatiya Janata Party (BJP) Government coming to power, there was hope that they would be more fiscally responsible, and they may be after six months in power. But as of today, they too seem to be eager to continuing down a similar path of unsustainable populism. The various freebies announced by the BJP pre-poll and their post-poll execution will significantly strain the state exchequer.

As of 2025 more than 2.2 crore women in West Bengal are getting money from the Laxmi Bhandar scheme. These women will also likely qualify to get Rs 3,000 per month from the “Annapurna Bhandar” scheme that the BJP has initiated. This will cost the state around Rs 79,200 crore every year.

There are also around 85 lakh unemployed youth who will get Rs 3,000 per month. This will cost the state further Rs 30,600 crore per year. The government also announced Rs 2,000 pensions for 45 lakh senior citizens and widows. This will cost an additional Rs 10,800 crore per year. These schemes alone will cost West Bengal over Rs 1.2 lakh crore every year.

The state is already paying a lot of money as interest on loans. In the year 2025-26 alone, West Bengal paid around Rs 50,000 crore as interest. This is an annually recurring cost that the government cannot avoid.

The Chief Minister, Suvendu Adhikari has said that the BJP government will continue all the welfare programmes started by the TMC. These include Kanyashree, which helps girls with education and costs Rs 16,554 crore. There is also Krishak Bandhu, which helps farmers and costs Rs 27,016 crore per year. Rupashree, which helps girls get married costs Rs 1,500 crore. Taruner Swapno, which gives tablets and smartphones to students costs Rs 1,000 crore per year. The state also spends around Rs 5,000 crore per year on schemes for Tribes, Scheduled Castes, Other Backward Classes and Minorities.

All these “welfare schemes” cost around Rs 2.25 lakh crore every year. This money is not used to develop infrastructure, create jobs or help the economy grow.

The states own revenue projections showcase the massive financial abyss the state is staring into. The tax revenue collection for the year 2026-27 is estimated to be around Rs 2.19 lakh crore. This means that West Bengal will not have money to cover all the “freebies” they are giving out. I have not even included the cost of running the government like salaries and pensions for employees, or funds needed for developing the state.

The inevitable result will be that West Bengal will have to resort to further borrowing from markets or the Central Government to bridge the widening fiscal gap.

This cycle of debt and freebies has persisted across governments in West Bengal for over a decade and a half. What began under the Left Front and intensified under TMC, now risks becoming continued under BJP.

For the BJP government to succeed where CPIM and TMC have failed, it must take hard decisions and channelize these unproductive capital into productive avenues. The people of West Bengal do not want freebies, they would rather the government invested in infrastructure, skill development, developing industries, provisioning better schools, colleges and university level education, and sustainable rural and urban growth that would generate genuine jobs and revenue.

West Bengal possesses immense potential, yet its strategic location with a young demographic raring to go remain under-utilised. Redirecting even a fraction of the Rs 2.25 lakh crore currently locked in cash transfers towards capital expenditure could transform the state’s economy. Without such a shift, the “fiscal hell-hole” will only deepen, burdening future generations with interest payments and stalled development.

The new government has a narrow window to break this cycle. It is advisable that instead of continued populism which will perpetuate financial ruin of the state, the government should focus on being prudent today to ensure prosperity for the citizens’ tomorrow.