Jagan’s sweeping doles spell trouble for Andhra Pradesh economy

Once political parties were accused of offering money to buy votes and capture power. The new trend seems to be purchasing the loyalty of the voters through an ingenious move — direct cash transfers from the government treasury.

Andhra Pradesh is not the first state to offer sops and welfare schemes to the poor. It’s Tamil Nadu that pioneered the concept. Former chief minister J Jayalalithaa was the queen of freebies but now, the mantle is with Andhra Pradesh Chief Minister Jaganmohan Reddy, who has taken to the idea to new heights.

Reddy is splurging taxpayers’ money on a number of doles and freebies, unmindful of its deleterious effect on the future of the state.

The new normal does not limit to extending benefits alone. It seeks to reinforce the Reddy family rule as the schemes are named after the chief minister’s family members. This is as if the doles are charity being funded from their personal accounts. The truth is it’s taxpayers money that is being used to build their image.

That’s why former chief minister Y.S. Rajasekhara Reddy’s name figured in the state budget 77 times and that of his son and current chief minister Jaganmohan’s 11 times. The all-encompassing doles ranges from direct cash transfers— such as ₹1 lakh to any SC, ST or minority girl about to get married or providing toothbrushes and paste to students.

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Since these dozens of handouts overlap one another, some have calculated that a family of four in AP may get up to ₹2 lakh with freebies a year by just sitting at home.

To give some examples of Jagan Reddy government’s munificence, 58 lakh people above the age of 60 get ₹2,250 a month under ‘YSR Pension Kanuka,’ About 50 lakh farmers get ₹13,500 a year under ‘YSR Rythu Bharosa,’ costing the exchequer about ₹10,200 crore. ‘YSR Aarogyasri’ provides health insurance, covering 2,000 diseases, benefitting 1.42 crore people.

Under ‘Jagananna Amma Vodi,’ every mother is provided with financial assistance of ₹15,000 per annum to educate her child from Class I to XII in public and private schools. Under the scheme, 42 lakh beneficiaries were identified this year, and ₹6,318 crore in total was deposited in their accounts.For those seeking professional education, the full fee is directly paid to the colleges on behalf of about 14 lakh students under ‘Jagananna Vidya Deevena’ scheme, being implemented at ₹3,700 crore.

And, the students don’t need to worry about miscellaneous expenses. ‘Jagananna Vasati Deevena’ will take care of food and hostel expenses by providing ₹10,000 a year to ITI students, ₹15,000 to polytechnic students, ₹20,000 for students who study degree and above courses. The amount is credited to the accounts of the students’ mothers, costing the government ₹2,300 crore.

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These are besides ‘Jagananna Gorumudda’ (midday meals for school and intermediate students) and ‘Jagananna Vidya Kanuka’ (a kit with 7 items for students) schemes.

There are schemes targeted at specific castes, further stratifying the caste identities in a state where caste rivalries have serious political undertones. Former CM Chandrababu Naidu was the one who began setting up corporations for various castes in the name of attending to their specific needs.

Reddy took the practice further with a slew of caste-based schemes. There is ‘Kapu Nestham’ under which financial assistance of ₹15,000 is given to women of the Kapu community in the age group of 45-60. The CM claimed that more than 23 lakh people in the Kapu community were given ₹4,470 crore benefit under different welfare schemes.

‘Jagannann Chedodu’ (Jagan Hand-holding) provides ₹10,000 to each of over 2.47 lakh washermen, barbers and tailors, amounting to ₹247 crore. ‘Nethanna Nestham’ (Friend of the Weaver), provides an annual aid of ₹24,000 for every weaver’s family. Under ‘Matsyakara Bharosa’ (Assurance to Fishermen), financial assistance of ₹10,000 is extended to more than a lakh fishermen.

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These are only a few of the many schemes covering almost every section of society. The attached table shows how Andhra Pradesh has turned into a truly ‘nanny’ state, playing a part in every aspect of the citizens’ lives.

According to government’s claims, as many as 3.98 crore people in the state with a population of 5 crore (2011 census) have benefited to the tune of ₹43,000 crore in the past one year, all of which went directly to their bank accounts as cash transfer.According to estimates, as much as ₹80,000 crore will be required for all the schemes announced in the budget for 2020-21. The direct cash transfer benefit schemes like ‘Amma Vodi’ (₹6,000 crore), ‘YSR Pension Kanuka’ (₹16,000 crore), ‘Jagananna Vidya Deevena’ (₹3,009 crore) among others alone received a budgetary allocation of ₹37,659 crore.

This is when the revenues are falling drastically in Andhra Pradesh with a moribund economy. As against the budgeted ₹1.78 lakh crore receipts in 2019-20, the revised estimates show receipts of ₹1.10 lakh crore — a shortfall of ₹68,000 crore.

The State’s debt burden shot up to ₹3.02 lakh crore by the beginning of this fiscal year from ₹2.59 lakh crore a year ago. It is expected to increase to ₹3.48 lakh crore or 34.55 per cent of the gross state’s domestic product (GSDP).

Since there is no productive expenditure, there is very little focus on creating permanent assets. A predominantly agricultural state, AP, under the Jagan Mohan Reddy government, has recently acquired notoriety with the industry for going back on several agreements entered into during the Naidu regime.

With COVID-19 further damaging the growth potential and the government bent on increasing welfare spend, the state is in a precarious financial condition.

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As a result of this double whammy, the economy may get short shrift, but the state government is not perturbed. Finance Minister Rajendranath Reddy boasted about the ‘stellar act of delivering on more than 90% of the promises enunciated in the manifesto in the very first year.’

CM Jagan Mohan Reddy is mightily pleased with his own generosity. “Never in history did the poor get benefited in this fashion in the state,” the Chief Minister said. The justification that such sops will enhance ‘the

capacity of our citizenry to improve their opportunities in life’ may be partially true, but the complete lack of focus on industry, investment, completion of dozens of pending projects and employment generation is worrying.

The increased but not targeted spend on education may yield some benefits, but extending handouts in the form of direct cash transfers and expanding the coverage for 80 per cent of the population cannot lead to sustainable livelihoods.

For a state that was focussing on attracting industrial investments and improving the service sector to gain financial muscle after the crippling effect of bifurcation, the reversals brought in by Reddy does not bode well. His recent rubbishing of the number one spot achieved by Andhra Pradesh in ‘Ease of Doing Business’ ranks in the last two years is a pointer to where Jagan Mohan Reddy’s priorities lay.

(The author is a Hyderabad-based freelance journalist)