Governments traditionally were expected to provide public goods, whether roads, bridges, clean water, sewage systems, public health, education, or law enforcement and justice administration. These goods, with large positive externalities and prone to underproduction by private players, cannot be delivered overnight. Nor are the benefits from them visible in the immediate term. The problem arises when expectations get altered. As politicians don’t look beyond the next elections and voters turn cynical about state capacity to discharge functions and supply public goods that private markets do not provide as effectively, the result is an all-pervading fiscally ruinous short-termism. Something of this sort is already apparent in the form of freebies being offered or promised by parties and voters also demanding more of those, while not trusting governments to do what is really good for them in the long run.
Bihar — and previously Maharashtra and Karnataka, which also went to the polls in the last couple of years — is illustrative of this phenomenon. The Nitish Kumar-led NDA government has transferred Rs 10,000 each to over 1.2 crore women ostensibly as start-up money for self-employment, under a scheme unveiled just days before the current Assembly elections. Not to be left behind, the Opposition Mahagathbandhan under Tejashwi Yadav has promised to deposit Rs 2,500 per month in the bank accounts of “eligible women” in Bihar for five years. This is in addition to 200 units of free electricity and, worse, a government job for at least one member of every family in the state. From where will the money come? The tendency of political parties to rely on short-termism also does a disservice to the shift in Bihar’s economy in the past two decades. The share of the services and construction sector in the state’s economy is constantly increasing, while that of agriculture is coming down. The median age of the state’s population is under 25 years. The politics in Bihar must, therefore, recognise the aspirations of its young women and men. The state needs policies that are inviting to industry and are conducive to creating jobs; it requires skill-development centres and institutions to nurture its young population.
At the same time, the political parties should realise that when voters see dysfunctional schools and hospitals, and feel it is beyond the capacity of governments to provide clean air and water, they ask for the next best thing: Money. Politicians, too, are happy to oblige, as technology makes it possible today to undertake direct cash transfers at scale. That would not only prove fiscally ruinous but could also make Bihar’s aspirational class cynical and disrupt the economic shift underway in the state. Bihar is poised for a take-off. It needs a vision that aligns incentives in a way that makes both voters and politicians think and act long-term. The lead has to come from parties focusing on development and good governance rather than bankrupting the exchequer.
