Why in the News?

Criticising the culture of “freebies”, Vice-President and Rajya Sabha Chairman Jagdeep Dhankhar recently said the issue should be debated in Parliament.

What’s in Today’s Article?

• Background (Context, Understanding Freebies, Subsidies, etc.)
• Rajya Sabha Chairman’s Point (Key Issues, Proposed Solutions, etc.)

Background:

• Rajya Sabha Chairman has raised concerns over the growing culture of freebies, urging Parliament to hold a serious debate on the issue.
• He emphasized the need for a national policy to ensure that government investments are structured and used for the larger public good.
• His remarks came after an opposition MP demanded an increase in Members of Parliament Local Area Development Scheme (MPLAD) funds from ₹5 crore to ₹20 crore per annum, citing rising construction costs.

Understanding Freebies and Subsidies:

• Freebies refer to government-funded benefits such as:
  • Free electricity, water, or transport.
  • Direct cash transfers without productivity conditions.
  • Loan waivers for specific sectors.
  • Free smartphones, laptops, or other consumer goods.
• These subsidies are aimed at specific economic needs, such as:
  • Agricultural subsidies for fertilizers, seeds, and procurement prices.
  • Food security subsidies through schemes like the Public Distribution System (PDS).
  • Education and healthcare subsidies for the underprivileged.
• VP stressed that subsidies, where necessary, should be directly transferred to beneficiaries, following the model of developed countries like the U.S., where farm subsidies are transparent and efficiently distributed.

Key Issues Highlighted by Rajya Sabha Chairman:

• Fiscal Sustainability of Freebies
  • Freebies impose significant financial burdens on state and central governments.
  • They often lead to higher fiscal deficits, forcing governments to cut funds from essential sectors like infrastructure, education, and healthcare.
  • Without a structured investment approach, resources may be misallocated, affecting long-term economic growth.
• Electoral Impact and Populist Allurements
  • Freebies are often used as election strategies to attract voters.
  • The Vice President pointed out that governments, once elected, often struggle with the financial burden of fulfilling these promises.
  • This raises concerns over policy continuity and governance efficiency.
• The MPLAD Fund Controversy
  • Samajwadi Party MP argued that current MPLAD funds (₹5 crore per annum) are insufficient due to rising costs.
  • He proposed an increase to ₹20 crore per annum, along with GST exemptions and a technical quality-control cell.
  • VP linked this discussion to the broader debate on efficient government spending, calling for a review of all public investment mechanisms.
• Disparity in Political Salaries and Perks
  • Dhankhar also spoke about disparities in salaries, pensions, and perks between MLAs and MPs, which vary significantly across states.
  • Some state legislators receive higher benefits than Members of Parliament, creating an imbalance in political remuneration policies.
  • A standardized system of political compensation could improve transparency and fairness.

Proposed Solutions for Managing Freebies:

• National Policy on Government Expenditure
  • A clear framework should define which welfare schemes qualify as essential subsidies and which are politically motivated freebies.
  • Parliamentary oversight could ensure that economic policies balance social welfare and fiscal responsibility.
• Direct Benefit Transfers (DBT) for Welfare Schemes
  • Eliminating intermediaries and using DBT for subsidies can reduce leakages and corruption. Examples:
    • Jan Dhan-Aadhaar-Mobile (JAM) Trinity has already streamlined benefit transfers.
    • Expanding DBT to all major welfare schemes could improve efficiency and accountability.
• Performance-Based Welfare Programs
• Linking benefits to employment generation, skill development, or community service can make schemes self-sustaining.
• Example: Instead of free electricity, incentivizing renewable energy adoption through solar power subsidies.
• Regulating Election Promises
  • The Election Commission of India (ECI) should consider guidelines that:
    • Mandate parties to disclose the financial impact of freebies before elections.
    • Ensure manifesto promises are backed by revenue generation plans.
• A Rationalized MPLAD Fund System
  • While increasing MPLAD funds can improve local development, it must be:
    • Monitored for transparency and efficiency.
    • Linked to long-term projects rather than short-term political benefits.

Conclusion:

The debate on freebies is essential to ensuring responsible governance and fiscal discipline in India.  While welfare schemes play a critical role in reducing poverty, they should be financially sustainable and efficiently targeted.

With Vice-President Jagdeep Dhankhar’s call for a structured policy, the discussion on government spending, political accountability, and electoral reforms is likely to gain momentum. A national consensus on balancing welfare and fiscal responsibility is the need of the hour.