India, April 6 -- Indian politics is a polarised space, but only in the social realm. While political parties often trade charges with each other on questions of religion and caste, there is one area where they have been near unanimous in the last decade or so: The growing use of cash transfers of all varieties to generate tailwinds for their campaign. This strategy is almost ubiquitous at the level of state governments. It has created problems both in the present, and more worryingly, the future. The former is seen in the deteriorating fiscal ability of states to meet their current commitments. Bihar, which implemented a large cash transfer to women scheme before the November 2025 elections, is now struggling to pay salaries and pensions. Maharashtra also suffered large-scale fiscal turbulence after its 2024 elections, which were preceded by the roll-out of a cash transfer scheme for women. None of this has stopped states, or parties, from promising more or higher cash transfers in the current election cycle. States' debt burden is growing as they are borrowing more to finance a lot of such schemes. This debt will have to be paid eventually. Essentially speaking, this amounts to burdening future generations for profligacy of the present one. The present and the future part of the problem is connected by the bridge of bond markets. As state governments raise more and more debt, bond yields are rising. The situation has become worse thanks to the ongoing geopolitical crisis where the war in West Asia has triggered an unprecedented oil-shock. Rising bond yields squeeze monetary policy's ability to keep overall interest rates low. Higher interest rates generate headwinds for near-term growth, which will worsen incomes, and generate more demand for economic palliatives. The fact that all government borrowing in India is treated as sovereign means that there is no incentive for states to observe prudence in matters of borrowing. All of this put together has created a vicious circle of political economy and fiscal hangover. Every economic disruption worsens matters. As India loses its demographic advantage of a higher share of the working population, things will become even more difficult. Solving the problem will not be easy. Political parties are most interested in retaining power. The cash transfer model promises them maximum attribution. But not resolving the problem is tantamount to making democracy a ponzi scheme....