Balancing Act: The Fiscal Challenges of Empowering Women in Madhya Pradesh

Earlier on December 3, Chief Minister Shivraj Singh Chauhan attributed the Bharatiya Janata Party’s win in Madhya Pradesh to the “immense and irrefutable faith” the people of the state had in Prime Minister Narendra Modi, the power of a ‘double-engine government’, and finally the ‘Ladli Lakshmi’ to ‘Ladli Behna’ schemes.

It is fair to say that the ‘ladlis’ of Madhya Pradesh deserve a bit more credit, considering they were the ones who cast the vote. Under which all women over the age of 23 would get Rs 1,000 per month. In June, when the first disbursals under this scheme were made, Chauhan announced that not only would the age threshold be reduced to 21 years, the monthly amount would also be increased progressively to Rs 3,000 per month from next year.

Then there is the Ladli Laxmi Yojana, under which the financial assistance to females up to the age of 21 has been increased by 40 percent to Rs 2 lakh.

As per the Madhya Pradesh Budget for 2023-24, the government had allocated Rs 8,000 crore for the Ladli Behna Yojana and a smaller Rs 929 crore for the Ladli Laxmi Yojana. Clearly, these numbers will go up significantly next year.

As per rough calculations, the combined annual allocation for these two women-centric schemes will increase to just under Rs 20,500 crore. Of course, the burden will be smaller in 2024-25 as the monthly pay-out under the Ladli Behna Yojana will rise to Rs 3,000 incrementally. But there are many other pre-poll promises the BJP needs to get the state’s finances ready to handle. These include LPG cylinders for Rs 450, free education from “KG to PG”, Rs 1,200 annual financial assistance for the purchase of school bags, uniforms, and books for students in classes 1^st to 12^th.

Can the state’s finances withstand these pressures? As per the 2023-24 Budget, the state expects its fiscal deficit to come in at 4.0 percent of its GDP this year. It is broadly on track, with the deficit for April-October standing at 54.2 percent of the full-year target. However, even if the target is met, it would be greater than the 3.5 percent upper limit – including an additional 0.5 percent that is permissible subject to certain conditions – that is allowed by the central government. Add another Rs 20,000 crore of committed expenditure and the situation looks even more delicate.

As per the 2023-24 Budget, Madhya Pradesh expects to reduce its fiscal deficit to 3.0 percent of the state’s GDP in 2026-27. Madhya Pradesh’s fiscal position isn’t strong to begin with, with the Reserve Bank of India (RBI) having identified the state as one of the 10 with the highest debt burden. Further, it is also one of the states whose own tax revenue has been declining for some time, making them fiscally more vulnerable.

To be sure, educating the girl child and ensuring financial security and dignity for women is crucial. Maybe such schemes are the key to increasing the female labour force participation rate. The hope is that the state’s finances don’t cave in before that.