But given that most of the states are starved of infrastructure on the one hand and are in no condition to provide guarantees, they seem to be caught in a Catch-22 situation. Importantly, state governments are already touching the upper limits for guarantees, as they provide similar guarantees for market borrowings. On the other hand, there is enhanced borrowings to meet shortfall in revenues. No wonder then, that credit-rating agencies have downgraded these states.

The worst of the lot being Maharashtra, to which even the World Bank has decided against any funding for infrastructureprojects. Undoubtedly, then the populist measures have accounted for its first victim. Furthermore, charging the already overburdened consumers is likely to affect cash-starved companies. Though some cash-rich companies will be able to bypass the cess on power tariffs by setting up captive-power generation. This, however, is not the solution. But there is little alternative for water, which has to be sourced from the state.

Thus in all likelihood, by the time the infrastructure is in place, the crowd of consumers to take advantage of the situation, would have shrunk. Hence, rather than overcharging consumers, the states will do well to take stock of the alarming situation and cut down populist measures, or else there will be hell to pay.