The freebies debate was reignited last month when Prime Minister Narendra Modi cautioned against the culture of distributing revris — a popular north Indian winter candy made of sesame and jaggery — or freebies for votes.
Speaking at the inauguration of Bundelkhand Expressway in Jalaun in Uttar Pradesh on July 16, he hit out at the Opposition saying that some governments are using freebies to secure votes, while the BJP is building infrastructure. “There are some governments which are indulging in revri culture to secure votes, while the double engine government is working towards creating new expressways and rail routes,” he said.
In another rally in Deoghar, he said: “Short-cut politics is a challenge today. People could get votes through populist measures. But the truth is that any country that resorts to short-cut politics is bound to face a short-circuit.”
It isn’t surprising that Opposition parties are not happy about it. Many leaders reacted to the Prime Minister’s jibe. The Congress, Samajwadi Party and AAP have slammed Modi’s stand, saying that welfare measures are not “freebies”.
The latest entrant to the debate is Tamil Nadu Finance Minister Palanivel Thiagarajan, whose take on welfare schemes in a TV debate has gone viral. He said, “You must have a performance track record, that you have grown the economy wonderfully or you brought down debt, increased the per capita income or created jobs. When neither is true, why we should listen to somebody’s view?”
The debate is not limited to politicians alone. Former RBI Governor D Subba Rao cautioned that freebies could become a burden for future generations.
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Supreme Court’s hearing
The Supreme Court is hearing a petition to curb the practice of offering “irrational freebies” at the cost of public money, especially in debt-ridden States in the run-up to elections.
In a hearing on August 3, it observed that the matter is a serious one and suggested that an expert committee – with members from the Centre, States, Niti Aayog, Election Commission, RBI and Opposition parties – be set up to discuss the matter. On August 11, it stressed on the need to create a balance between providing welfare measures and the economic strain on the exchequer.
In a hearing on August 17, the court questioned the difference between welfare schemes and freebies. “Can the promise of subsidy on power, seeds and fertilisers to small and marginal farmers, free healthcare and drinking water be considered as freebies? Can we treat promises of consumer products and electronics free-of-cost for all as a welfare measure?” the top court asked.
Political parties such as the AAP DMK and YSR Congress have filed affidavits in the Supreme Court, asking to join the proceedings in this matter. The parties have vehemently opposed the BJP’s stance.
What is a freebie?
Well, there is no exact definition and that’s the problem. Generally, the government expenditure on public goods like healthcare, PDS, education, health and employment are considered welfare measures, while spends on free TVs, cycles, cattle and loan waivers are considered freebies.
Even the Constitution has mandated that State secure a social order for the promotion of the welfare of the people and minimise and even eliminate inequalities in income, status and opportunities (Article 38).
The problem comes when it becomes a burden on the State’s finances. In a report, the RBI lists the growing preference for distribution of “freebies” as a potential source of fiscal risk.
Data from the Comptroller and Auditor General of India (CAG) shows that the State governments’ expenditure on subsidies has grown by 12.9 per cent (in 2020-21 ) and 11.2 per cent (in 2021-22), after contracting in 2019-20. The share of subsidies in total revenue expenditure by States has risen to 8.2 per cent in 2021-22 (from 7.8 per cent in 2019-20).
Jharkhand, Kerala, Odisha, Telangana and Uttar Pradesh are the top five States, with the largest rise in subsidies over the last three years. Gujarat, Punjab and Chhattisgarh spend more than 10 per cent of their revenue expenditure on subsidies.
The problem with the freebie culture is manifold. If you want to stop it by legislating a ban on it, defining it is a problem in itself. Also, no political party might actually do away with the possibility of handing out doles before an election. They will find ways to sidestep the rules. The top court’s solution of setting up a committee to discuss the matter also faces similar problems.
Then, there is also a rich versus poor debate on the horizon. The government provides subsidised water, and electricity and even offers tax breaks to industrialists. So will people seek to do away with these “incentives” next?
For now, the debate will go on and it might be a while before we reach a consensus. In the meanwhile, let parties and the government concentrate on getting the basics – providing healthcare, PDS, education, health and employment – right.