Dammit it is the budget!

Total routing of Jagan Mohan Reddy's party in Andhra Pradesh is a lesson to all political leaders. Over emphasis on freebies with a view to building up vote banks may not always pay. In fact, beyond a point it may boomerang.

It was expected that he was likely to lose. But it was beyond expectations that he would lose so badly and routed completely. The vote banks he tried to build up in 5 years distributing freebies far beyond the fiscal capacities of the state did not stand him in good stead to win the election.

Where did it all go wrong? When you start stretching too much the fiscal capacity of the state it hurts back in a number of unseen ways. What apparently looked like solid vote banks also resulting building up negative vote banks in an unseen way.

In the end, all budgets are limited. There is no way any politician can stretch them beyond a point. If you gain a constituency by distributing freebies, you may lose equal are greater constituencies for want of resources. Take for example the way the Jagan Mohan Reddy government worked. In their anxiety to deliver on time to their selected constituencies of beneficiaries, they neglected other important constituencies like the employees and the teachers. Not receiving salary and pensions on the due date has become a matter of routine with his government. All construction works were stopped.

Bills payments to the contractors were not made including those from his own party. Liquor rates were increased abnormally turning the men folk against the government, while the women folk beneficiaries of freebies became vote bank constituencies. Freebie culture resulting in scarcity of labour hurt the interests of the small and middle class farmers.

Hence, while Jagan Mohan Reddy was thinking he was building up strong vote bank constituencies without realising he was also building up anti-vote bank constituencies. In any election, the beauty is those who are hurt solidly vote against the government. Those who are beneficiaries may or may not vote. This led to his undoing.

All this after he messed up the finances of the state borrowing far beyond the capacity of the state to sustain. He also indulged in certain unconventional, fiscally, constitutionally wrong practices like discounting the future incomes of the state and borrow in the present against future streams of revenue of the states. But all this did not help him to win a second term. He harmed the state finances beyond repair but failed to get any political benefit out of it.

He will remain a case study for future politicians who think by indiscriminate freebies culture they can reap political dividends. A constituency built up can also result in a constituency lost and the constituency lost may be bigger.

In the end, there is no substitute to good governance and a proper balance while running the government. That is the only way a politician can survive and be relevant. Till now, fiscal profligacy was only looked from the angle of economics how it will derail development and growth. Jagan Mohan Reddy has proved that it not only has economic costs but political as well. As economist Milton Friedman said, there is no such thing as a free lunch either in the economy or in politics.

You gain some to lose some and the loss can be more. Sooner the politicians realise this, the better for the country and the economy. There is no substitute to good governance and that alone can build up political constituencies for a long political future.