Picture India’s Prime Minister as Santa Claus: recently, on the eve of Navratri, a week-long festival heralding the major Hindu celebrations of Dussehra and Diwali, Narendra Modi announced a reduction in value-added tax (VAT) on a long list of everyday goods. From now on, butter, ketchup, vegetarian pizza, toothpaste, aftershave, dishwashers, cement, and other products are between 3 and 12 percent cheaper.
Britta Petersen directs the Rosa Luxemburg Foundation’s South Asia Office in New Delhi.
“Your savings will increase, and you will be able to purchase your favourite items more easily. The poor, the middle class, the new middle class, youth, farmers, women, shopkeepers, traders, and entrepreneurs — all will benefit greatly from this savings festival. In other words, during this festive season, everyone’s heart will be filled with sweetness”, Modi declared in his 19-minute address to the nation.
It is fair to assume he is not distributing these gifts purely out of festive goodwill. Elections are scheduled for November in Bihar, one of India’s most populous and poorest states. “Prime Minister Modi has made this important decision at precisely the right moment”, said Ramdas Athawale, Minister of State for Social Justice and Empowerment. “We will win [the elections] in Bihar.”
Athawale is a trade unionist and belongs to the Republican Party of India (A), a junior coalition partner of Modi’s Hindu-nationalist Bharatiya Janata Party (BJP). The party traces its roots to the Scheduled Castes Federation of Dalit lawyer B. R. Ambedkar. Modi, himself from a lower caste, recognizes that elections cannot be won through religion and ideology alone.
In India, over 60 percent of the population belongs to lower castes or the casteless (Dalits), entitling them to quota-based employment (so-called “reservations”) in the civil service, while more than 800 million people receive subsidized food under the National Food Security Act. This underscores the fact that bread-and-butter issues are decisive in elections.
“The Prime Minister’s Gas Cylinder Programme”
This benefits parties that (co-)govern a one of India’s states and territories — and particularly the federal government in New Delhi. These often market their programmes under the Prime Minister’s name. For instance, “The Prime Minister’s Gas Cylinder Programme” provides free cooking gas to lower-income groups in the form of gas cylinders adorned with Modi’s image. “The Prime Minister’s Housing Programme” has built 25 million new rural homes since 2016. One such home will soon belong to the five-member Bhallavi family from Madhya Pradesh in central India, which received a grant of 120,000 rupees (approximately 1,200 euro). “Life is tough”, said Mr. Bhallavi, “but I’m grateful to the government for enabling me to build my first house”.
The more voters depend on the state, the more important election gifts become.
Modi’s most successful initiative, however, remains the “Swachh Bharat” (Clean India) mission, which aims to combat open defecation through mass construction of toilets. Since the programme’s launch in 2014, the government claims to have built over 100 million toilets. To achieve the ambitious goal of making India entirely free of open defecation by the end of 2025, the “Free Sauchalay Yojana” hygiene programme was launched this year, offering families without toilets 12,000 rupees (120 euro) to support construction.
As India’s economy has grown steadily for years, social programmes and so-called revdis (Hindi for “freebies”) have reached unprecedented levels. “Government spending on these handouts is estimated at 0.1 to 2.7 percent of GDP”, said Ajay Dua, former Secretary in the Ministry of Commerce. “Poorer states spend more, despite having less capacity.”
"It’s Raining Welfare"
There is a clear logic to this, as the more voters depend on the state, the more important election gifts become. That is why the parties try to outdo each other in offering the most attractive gifts, creating a maze of welfare programmes that is hardly navigable. “It’s raining welfare in Bihar,” headlined The Hindu recently. Often, the potential beneficiaries are not even aware of their good fortune.
The Chief Minister of Bihar, Nitish Kumar of the Janata Dal (United) party, who currently leads a coalition government with Modi’s BJP, has announced that volunteers who help people from the lowest castes and indigenous populations in villages to assert their rights will receive a subsidy of 25,000 rupees (250 euros) to purchase a tablet computer. Additionally, their transport and office supply allowances have been increased.
Other state programmes in Bihar include a grant of 10,000 rupees (100 euro) for smartphones to help disadvantaged children access the education system, unemployment benefits of 1,000 rupees per month for young graduates, loans of up to 200,000 rupees for women in business, a 5,000-rupee clothing allowance for construction workers, and a 700-rupee increase in monthly pensions for widows and the disabled.
It is not easy to distinguish between these freebies and the integral components of India’s constitutionally guaranteed welfare state. The Constitution’s preamble declares India a “sovereign, socialist, secular, democratic republic”. Prime Minister Modi emphasizes that his programmes are by no means revdis. “Revdi culture is antithetical to our country’s development”, he said recently. “Those who support this culture will never build new motorways or airports.”
Free offers and welfare programmes must be distinguished from each other, says former Chief Justice D. Y. Chandrachud. “There must be a balance between economic costs and public welfare”, he said. In 2022, he urged parties to present a framework for distinguishing the two “before my retirement, please”. Chandrachud retired in 2024, but the debate continues.
Criticism of “Welfarism”
Modi claims his government has already paid out 34 trillion rupees, around 340 billion euro, in direct cash transfers to low-income households since 2014 — more than 30 billion euro per year. Political scientist Devesh Kapur of Johns Hopkins University speaks of a “virus of cash transfers” across parties and states. There are now about 2,000 cash-transfer programmes in the country. “Every party in India knows that welfare matters to voters”, Kapur says.
Economist Arvind Subramanian, a former government advisor, refers to Modi’s “new welfarism” that prioritizes private spending such as toilet construction over public goods like basic education and healthcare. “States are playing with fire”, he warns. “These programmes have become permanent entitlements. I don’t know where this will end.”
Still, Kapur can also see the positive side of this development. The Indian state’s capacity to reach hundreds of millions of people has increased massively. “Over the past decade, the state has opened bank accounts for 350 million people, provided gas connections to 80 million households, and built 100 million toilets serving 600 million people. There’s no doubt the Indian state can now transform inputs into outputs”, says Kapur. In other words, Modi’s government is delivering.
While much of what can be described as welfarism is commendable, there’s concern that it comes at the expense of a system vital for long-term productivity and growth.
Whether the money is always wisely invested is another matter. N.K. Singh, chair of India’s fifteenth Finance Commission, which oversees revenue distribution between central and state governments, calls the giveaways a “fiscal disaster”.
“In reality, the persistence of freebie culture is a sign that our economic policy is failing to build a welfare state that invests in human capital”, says economist Yamini Aiyar from the Centre for Policy Research (CPR), a think tank in New Delhi.
India spends only about 3 percent of its GDP on healthcare, compared to 11–12 percent in most industrialized nations. Education spending, at around 4 percent, aligns with global averages. But both systems, health and education, are highly inefficient.
“No nation can achieve greatness when so many citizens’ life chances are limited by malnutrition, inadequate education, and gender-based discrimination”, according to the Indian government’s 2018 economic report. Yet such insights don’t win election campaigns.
“All this requires building stable institutions, which is hard work”, Devesh Kapur said. “While much of what can be described as welfarism is commendable, there’s concern that it comes at the expense of a system vital for long-term productivity and growth.”
Socialism may be enshrined in India’s Constitution, but it is absent from the election platform of most parties. Occasional demands to remove the term from the preamble have so far lacked the necessary majority. “Over the years socialism has evolved into a widely accepted general concept understood as economic and social justice for all”, explained journalist Neerja Chowdhury. Prime Minister Narendra Modi, she noted, is more of a social policymaker than many of his predecessors — a key factor in his enduring popularity.
Translated by Diego Otero and Marc Hiatt for Gegensatz Translation Collective.