Social support not at cost of operational efficiency |
As the dust settles over West Bengal’s electoral mandate, one re ality stands reinforce d – welfare-driven governance continues to enjoy public legitimacy. Schemes involving direct financial support have provided relief to households navigating inflation and uncertain employment .
In a state with longstanding social and economic disparities, welfare is not simply political messaging; it is often an instrument of stability. Yet the larger question concerns its long-term economic design. This is not abstract. Bengal’s 2025-26 Budget projected a gross state domestic product (GSDP) of approximately Rs. 20.31 lakh crore alongside a fiscal deficit of 3.5 per cent of GSDP. At the same time, recurring welfare commitments continued expanding steadily, with the Lakshmir Bhandar scheme alone estimated to account for over Rs. 26,000 crore in expenditure.
While the constitutionality of “freebies” as electoral promises, is presently under consideration before the Supreme Court of India, much of the discourse pertains to electoral ethics and fiscal discipline at most. But the deeper economic effect of persistent welfare-heavy governance often escapes the attention it deserves – the gradual increase in the hidden costs of economic participation itself. British economist Ronal Coase explained this idea remarkably. Coase argued that economies thrive when the friction surrounding transactions remains low. Businesses invest more confidently when approvals and licenses are predictable, contracts are enforceable and reliable. Growth, in other words, depends not only on incentives, but on ease.
This is where Bengal’s challenge becomes more subtle. The concern arises when recurring expenditure begins outpacing institutional capacity and investment. Over time, this imbalance begins........