In News: During a hearing on a petition to curb the practice of offering or distributing “irrational freebies”, the top court pointed out that political parties have lost elections despite promising freebies.
The court pointed out that voters, if given a chance, will prefer to earn a dignified earning through welfare schemes such as MNREGA and create public assets in rural India.
Freebies do not always decide the outcome of elections for political parties, said the SC.
A Bench led by Chief Justice of India N.V. Ramana said there have been instances of parties losing elections in spite of their promises of freebies.
Background
The court was hearing a petition to curb the practice of offering or distributing “irrational freebies” at the cost of public money, especially in debt-ridden States during the run-up to elections.
The primary concern is about “the right way of spending public money”. Thus the court is dealing with rival contentions raised in the case.
The question is what exactly qualifies as a ‘valid promise’? Can 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, electronics free of cost for all as a welfare measure?” the court asked.
What are Freebies?
Political parties promise to offer free electricity, monthly allowance to unemployed, daily wage workers, and women as well as gadgets like laptops, smartphones, etc. in order to secure the vote of the people.
The states have become habituated to giving freebies, be it in the form of loan waivers or free electricity, cycles, laptops, TV sets, and so on.
Certain kinds of expenditure that are done under populist pressures or with elections in mind may be questionable.
Positive Side of Freebies in India
Welfare Schemes: Freebies not only include unviable pre-election promises but also a number of services that the government provides to meet its constitutional obligations (DPSPs) towards citizens like PDS, Free Covid Vaccine and MGNREGA.
Examples include
The ‘Mid-day Meal Scheme’ was first introduced in 1956 by Tamil Nadu’s Chief Minister K. Kamaraj and then it was adopted as a national programme a decade later.
NT Rama Rao’s promise of rice at Rs. 2 per kg in Andhra Pradesh is the original avatar of the current day National Food Security Programme.
Rythu Bandhu of Telangana and Kalia of Odisha were forerunners of what is now Kisan Samman Nidhi.
Upliftment of Lower Class: As the states with comparatively lower levels of development have a greater percentage of their population living in poverty, such freebies become more useful for upliftment of lower strata in these states.
Essential for Fulfilling Expectations: In a country like India where the states have (or don’t have) a certain level of development, upon the emergence of the elections, there are expectations from the part of people which are met by such promises of freebies.
Negative Impacts of Freebies
Drain on Public Spending: Most of the times, freebies ultimately lead to an excessive and unnecessary drain on public spending, and adds economic burden on states as most Indian states suffer from a poor financial condition and have limited revenue resources.
Freebies for One, Disaster for Other: As a result of reducing prices for consumers beneficiaries, the government overcharge industrial and commercial contracts in order to maintain the internal fiscal balance.
Subsequently the competitiveness of growing industries is reduced, which results in slower industrial growth and commercial price hike.
Increased Fiscal Deficit:Subsidies and freebies creates pressure on government revenues, leading to an increased fiscal deficit and increased interest payments.
Distort Informed Decision Making of Voters: Unregulated populism by offering and distributing ‘irrational freebies’ during election campaigns often create bias in the minds of voters.
Way Forward
Drawing a Line Between Welfare and Freebie:
Freebies must be understood from an economic perspective and connected to taxpayers’ money.
Differences between subsidy and freebie are also essential since subsidies are justified and specially targeted benefits meant to meet specific demands.
Clear Rationale and Indication of Funds:
Programs must provide a clear rationale for investing more in basic amenities and have a clear indication of the funds to sustain the state’s economic health.
Voter Awareness:
In a democracy, the power to block or allow the march of freebies rests with the voters.
There is a need for consensus between regulating the irrational freebies and making sure voters don’t get swayed by the irrational promises.
Judicial Intervention:
A constructive debate and discussion in parliament is difficult since the freebie culture has an impact on every political party, whether directly or indirectly. Therefore, judicial involvement is required in order to propose measures.
The Supreme Court has recently recommended creating an apex authority to provide recommendations on how to regulate gifts given out by political parties.
Focus on Skill Development Rather than Freebies:
It is always better to provide useful skills to the people than to give them freebies.
There is nothing wrong in having a policy-led elaborate social security programme that seeks to help the poor get out of poverty.
But such a programme needs well thought out preparation and cannot be conjured up just before an election.
Finance commission Chief N.K Singh recently pointed out that political competition over such sops is a “quick passport to fiscal disaster”. Hence, there is a need to avoid those before they become the norm.
