What’s in Today’s Article?

• Introduction (Context)
• About Freebies (Freebies vs Welfare, Judicial Interventions, Political Significance, Way Forward, etc.)

Introduction:

• The debate on freebies vs. welfare schemes in India has intensified in recent years, especially after Prime Minister Narendra Modi's statement in July, 2022, calling the "revadi" culture (a reference to political freebies) dangerous for the country's development.
• The issue has since been taken up by the Supreme Court, which is examining whether promising and distributing freebies ahead of elections influences voters unfairly.
• At the heart of this debate is the question: What differentiates essential welfare policies from election-driven freebies?
• While welfare measures have played a crucial role in India's development, there is concern that excessive political giveaways could strain state finances and undermine economic growth.

Understanding the Freebies vs. Welfare Debate:

• The Role of the Welfare State
  • Welfarism has existed in India’s governance structure since independence, evolving through various phases.
  • The Five-Year Plans initiated under Jawaharlal Nehru focused on industrial growth and economic development.
  • However, recognizing the need for direct social welfare, the mid-day meal scheme, Public Distribution System (PDS), and employment guarantee schemes were later introduced to support the poor.
  • The Directive Principles of State Policy in the Indian Constitution also recognize the state’s responsibility to provide basic needs such as education, healthcare, employment, and food security. Over time, states have played a key role in expanding these social security measures.
• Welfare Measures vs. Freebies:
  • The lack of a clear definition of freebies has fuelled the controversy.
  • While some argue that providing free electricity, water, or cash transfers is an economic burden, others claim that these initiatives empower marginalized communities.
  • Welfare measures such as subsidized food, healthcare, and education are recognized as essential for human development.
  • Freebies like laptops, TVs, gold coins, and cash handouts often serve political objectives rather than economic needs.
  • Some items, like bicycles for girls to improve education access, blur the line between essential welfare and election-oriented giveaways.

Judicial and Regulatory Interventions:

• Supreme Court’s Stand on Freebies
  • The Supreme Court has historically struggled to distinguish between welfare policies and political inducements:
  • In Subramaniam Balaji v. State of Tamil Nadu (2013), the Court ruled that while freebies influence voters, they do not constitute bribery or corruption.
  • However, in 2022, the Supreme Court referred a petition challenging the constitutional validity of freebies to a three-judge bench, arguing that they may disrupt free and fair elections.
• Election Commission’s Guidelines
  • The Election Commission of India (ECI) initially remained silent on the issue but later introduced a pro-forma in October 2022, requiring political parties to explain the financial feasibility of their poll promises.
  • This move sparked criticism from opposition parties, who viewed it as an interference in democratic rights.

The Political Landscape: Freebies in Elections:

• The Delhi Assembly elections showcased how all major political parties competed through subsidy and freebie promises:
  • AAP pledged ₹2,100 per month for women and ₹500 LPG cylinders for low-income families.
  • BJP countered with ₹2,500 monthly aid for women and a solar-powered free electricity plan.
  • Congress joined in with its own welfare promises, making it clear that electoral freebies are a cross-party phenomenon.
• Popularity of Freebies in Elections
  • Immediate Appeal to Voters – Unlike long-term policies, freebies provide direct and tangible benefits.
  • Clientelism in Politics – Welfare benefits are often distributed strategically to influence key voter segments.
  • Lack of Structural Development – In the absence of strong employment generation and skill-building programs, cash transfers and subsidies act as short-term relief measures.

Economic Concerns: The Fiscal Impact of Freebies

• Rising State Debts and Fiscal Risks
  • The RBI report on State Finances (2022) raised concerns that:
  • Subsidy expenditure has sharply increased, leading to financial instability.
  • Many states are running large fiscal deficits, which could impact their ability to fund long-term infrastructure projects.
• Revenue Deficit and Fiscal Burden
  • Delhi’s revenue surplus fell from ₹14,457 crore in 2022-23 to a projected ₹3,231 crore in 2024-25 due to increased freebie expenses.
  • Annual revenue expenditure is expected to rise by ₹10,000-12,000 crore in states where freebies dominate election promises.
  • Potential consequences include higher taxation and reduced investment in productive sectors.
  • Economists warn that unless subsidies and giveaways are carefully rationalized, they could slow down economic growth and reduce capital for essential public services.

The Way Forward: Balancing Welfare and Fiscal Responsibility

• Institutional Reforms and Regulatory Measures
  • The parliament must lead the discussion on defining and regulating freebies vs. essential welfare.
  • Stronger financial oversight is needed to monitor both central and state-level subsidies.
  • The Fiscal Responsibility and Budget Management (FRBM) Act, 2003, which limits deficit spending, should be enforced more strictly.
• More Targeted Welfare Programs
  • Welfare schemes should be needs-based and designed for long-term economic impact.
  • Instead of universal free handouts, policies should focus on specific disadvantaged groups.
  • Digital governance tools like Direct Benefit Transfers (DBT) can reduce leakages and ensure funds reach the intended beneficiaries.
• Enhancing Economic Growth Instead of Short-Term Sops
  • Employment generation programs and skill development initiatives should replace pure cash subsidies.
  • Infrastructure investments in education, healthcare, and agriculture can uplift communities sustainably.