NEW DELHI — Having unexpectedly won two Indian state votes late last year, in big part due to a slew of handouts, Prime Minister Narendra Modi's party is deploying the same playbook in a bid to wrest back Delhi for the first time in nearly three decades next month.

Standing in the way of the Bharatiya Janata Party (BJP) is a smaller but bitter rival that has ruled the national capital for a decade through largesse such as free water and power for the poor — its main voter base.

Governing the historic city of 20 million is considered prestigious, though, unlike full-fledged states, it is called the national capital territory where police and many other senior officials are directly or indirectly controlled by the federal government.

The BJP and Delhi's Aam Aadmi Party (AAP) have often been at loggerheads over how to run the city.

In a bid to capture power there, the BJP is now trying to beat the AAP at its own game, although both Modi and the central bank have warned against fiscally damaging freebies.

The BJP's promises announced last week and this week include monthly payments of 2,500 rupees (S$39.12) to all poor women, 21,000 rupees once to each pregnant woman, subsidised cooking gas, a monthly pension of 2,500 rupees for the elderly, 15,000 rupees for the young to prepare for competitive exams, and a monthly stipend of 1,000 rupees to students from underprivileged castes studying technical and vocational courses.

"Our manifesto has unsettled our opponents," BJP lawmaker Anurag Thakur told reporters. "They are scared that we are giving cash to women, subsidised cooking gas, free food and so on."

The Aam Aadmi (Common Man) Party said the BJP was copying its formula of directly helping the poor. India's main opposition party, Congress, meanwhile said it was the better alternative because, beyond handouts like 2,500 rupees for women a month, it was also focusing on issues like Delhi's abysmal air and water.

The AAP's pledges include a monthly payment of 2,100 to all women voters not working for the government or getting any other pension, 18,000 rupees a month to all Hindu priests and ceremonial readers of the Sikh holy book, financing foreign education of students from underprivileged castes, and payments for uniforms for autorickshaw taxis and money for the weddings of their daughters.

Delhi votes on Feb 5 and results will be out on Feb 8.

Opinion polls, which have often proved wrong, expect the BJP to trail the AAP.

Yashwant Deshmukh, founder of polling agency CVoter, said the AAP had an edge, especially among women voters. About half of the nearly 3,200 people it surveyed said they did not want to change the government.

"AAP has a good track record on delivering freebies in Delhi," he said.

For the current fiscal year ending March 31, the Delhi government has budgeted spending nearly 63 billion rupees, or more than eight per cent of the total outlay, on populist programmes including free electricity, cash and free bus service for women.

If the new promises by the BJP or AAP come through after the election, it could mean additional spending of more than 50 billion rupees, pushing the share of subsidies in the city's budget to about 20 per cent of total expenditure, from 15 per cent.

The AAP's populism is already draining the city's finances. Last fiscal year, Delhi's revenue surplus fell by about a third to 49.66 billion rupees.

Comes at cost

In recent years, cash giveaways, free power, loan waivers, and other goodies have become common features ahead of Indian elections. Late last year they helped the BJP buck opinion polls and retain Maharashtra and Haryana states, while the opposition kept Jharkhand.

While distributing pre-election goodies such as fans and kitchen utensils have long been part of Indian politics, political parties have been increasingly resorting to direct cash transfers in the past two years or so.

Such spending has worsened the finances of many states and forced them to borrow more at high cost. Indian states plan to raise 4.73 trillion rupees between January and March, a quarterly record.

The Reserve Bank of India warned last month that such sops could come at the cost of critical social and economic infrastructure.

Six more states are due to vote this year and the next, and analysts at HDFC Securities expect a flurry of such promises as "they significantly increase the chances of a government coming back to power".

In the current fiscal year, more than a third of India's 36 states or federal territories have announced or are running various handout programmes. Budgeted deficits for nearly all of them were higher than five years ago, with many cutting capital expenditure to fund the populist measures.

Rasheed Kidwai, a visiting fellow at the Observer Research Foundation think tank, said politicians' rising reliance on handouts was bad for Indian democracy.

"This is against the grain of the Indian Constitution and the spirit of parliamentary democracy because votes seem to be getting auctioned," he said. "It's going to the highest bidder."

Source: Reuters