The true ‘freebie’ issue is campaign promises of gifts rather than welfare.
GS Paper 2: Government Policies
“Over the years, freebies have become an integral part of Indian politics.” While some initiatives, such as Public Distribution Schemes and MGNREGA, have become critical components of India’s growth strategy, freebies undermine the fundamental framework of macroeconomic stability.” Discuss. (250 Words)
The Practice Recommendation
- The Supreme Court has stayed its hand and referred the issue to a three-judge Bench after considering the formation of an expert body to investigate issues relating to political parties promising free goods to voters in their election manifestos.
- An earlier decision in S. Subramaniam Balaji vs Tamil Nadu (2013), which ruled that making promises in a manifesto would not constitute a corrupt practise, is also referred for further consideration.
Perspective on Freebies
- Last week’s proceedings before a Bench led by the now-retired Chief Justice of India N.V. Ramana provided critical perspectives on the political economy of welfare, socialism, and pre-election promises of “freebies.”
- Over the course of the few hearings, the Bench progressed from vague references to ‘freebies’ to making rational distinctions between welfare schemes and socio-economic concessions on the one hand, and poll-time announcements of material goods and items as voting incentives on the other.
Governments take a stance
- Those who have approached the Court in response to irrational promises have received support from the Union government.
- The Government’s stance comes as no surprise after Prime Minister Narendra Modi made public comments criticising the “freebie” culture.
- However, the government was hesitant to examine the issue through political party discussions and instead preferred a judicially appointed panel. However, such a panel may not accomplish much.
Judicial Intervention’s Scope
- Most parties oppose any restrictions on their right to appeal to voters through any means they see fit and, if elected, to distribute finances and resources as they see fit, subject to law and legislative approval.
- As a result, it is not surprising that the Bench has included questions about the scope of judicial intervention in the matter and whether any enforceable order can be issued in the reference.
- The two-judge Bench decision in 2013 examined the issue in the context of the DMK coming to power in 2006 on the promise of distributing television sets to the poor and carrying it out.
- It ruled that such schemes are permissible under the Directive Principles of State Policy and that spending of public funds on them cannot be challenged if it is based on appropriations passed by the legislature.
Advantages of Freebies
- Facilitates Growth: Some examples show that some expenditures have overall benefits, such as the Public Distribution System, employment guarantee schemes, education support, and increased health expenditures, particularly during the pandemic.
- These contribute significantly to the population’s productive capacity and aid in the development of a healthier and stronger workforce, which is an essential component of any growth strategy. The same is true for government spending on education or health care.
- Boosts Industries: States such as Tamil Nadu and Bihar are known for providing sewing machines, saris, and cycles to women, but they do so using budget funds, which contributes to the sales of these industries.
- Given the corresponding production, it can be considered a boon to the supplier industry rather than a waste of money.
- Essential for Meeting Expectations: In a country like India, where states have (or do not have) a certain level of development, there are expectations on the part of the people that are met by such promises of freebies.
- Furthermore, there are comparative expectations when people in neighboring/other states (with different ruling parties) receive freebies.
- Helps Lesser Developed States: In states with a lower level of development and a higher proportion of the population living in poverty, such freebies become need/demand-based, and it becomes necessary to provide such subsidies to the people for their own upliftment.
Disadvantages of Freebies
- Macroeconomically Unstable: Freebies undermine the fundamental framework of macroeconomic stability, freebie politics distorts expenditure priorities, and outlays remain concentrated on one type of subsidy or another.
- Impact on State Fiscal Situation: Offering freebies has an impact on the public exchequer, and most Indian states do not have strong financial health and often have very limited revenue resources.
- If states continue to spend money for ostensible political gains, their finances will suffer and fiscal profligacy will reign.
- States cannot borrow beyond their borrowing limits under Fiscal Responsibility and Budget Management (FRBM) rules, and any deviation must be approved by the Centre and central bank.
- As a result, while states have flexibility in how they spend their money, they cannot exceed their deficit ceilings under normal circumstances.
- Against Free and Fair Elections: The promise of irrational freebies from public funds prior to elections unduly influences voters, disrupts the level playing field, and taints the poll process’s purity.
- It amounts to unethical behaviour akin to bribing the electorate.
- A Step Away from the Environment: When freebies involve providing free power, or a certain amount of free power, water, and other types of consumption goods, it diverts resources away from environmental and sustainable growth, renewable energy, and more efficient public transportation systems.
- Furthermore, it is a general human tendency to use things in excess (resulting in resource waste) when they are provided for ‘free.’
- Freebies reduce the quality and competitiveness of the manufacturing sector by detracting from efficient and competitive infrastructure that enables high-factor efficiencies in the manufacturing sector.
- Destroys Credit Culture: Giving away loan waivers in the form of freebies may have unintended consequences such as destroying the entire credit culture and blurring the very basic question of why a large majority of the farming community repeatedly falls into debt traps.
- The bench concluded that a party’s election promises could not be considered a “corrupt practise.”
- That Bench also rejected the argument that providing benefits to everyone, both rich and poor, would violate the equality norm in Article 14.
- When it came to state handouts, it stated that the rule against treating unequals as equals would not apply.
- Is this implying that the Directive Principles can trump fundamental rights, as the petitioners claim? This, too, will be investigated.