Free loan waivers to farmers, free electricity to state governments. Schemes to provide water, free rides in buses are doing to the exchequer of the government!

The Reserve Bank of India (RBI) has expressed concern over the populist announcements made by state governments like loan waivers, free electricity and water, free bus rides to farmers for electoral gains. The Reserve Bank of India (RBI) in its report titled 'State Finances: Study of Budgets of 2024-25' released on Thursday, December 19, 2024, said: The report titled 'A Study of Budgets of 2024-25' has been released. "Many states have announced loan waivers for farmers. Apart from this, the states have announced free electricity for both agriculture and domestic use. According to the RBI, free transport facility is also being provided in some states. Apart from the allowances to the unemployed youth, help is also being given to women for the financial year 2024-25. 
Such expenditures can impact the development of critical capabilities such as social and economic infrastructure, the RBI said in its report. Such populist announcements can affect the development of these things considered very important. In its report, the RBI has termed the subsidy burden on the state exchequer as dangerous due to increased spending on items such as loan waivers for farmers, free electricity to agriculture and households, free transport as well as cheaper LPG cylinders, and cash transfers to youth and women. The RBI has asked the states to control and rationalise their subsidy expenditure so that there is no shortage of funds for spending on social and economic infrastructure development. The RBI, in its report, also expressed concern over the deteriorating financial health of state electricity distribution companies (DISCOMs). According to the RBI, the financial health of discoms continues to pose a serious challenge to the financial health of states. Despite the financial restructuring, the outstanding debt of state power distribution companies has increased from Rs 4.2 lakh crore to Rs 6.8 lakh crore in 2022-23, an increase of 8.7 per cent from 2016-17, which is 2.5 per cent of the GDP.