Jagdish R Sharma
A trend has been set in India by some political parties to offer tonnes of freebies before the elections. This trend has become fashion now to lure gullible voters. This can prove dangerous as long-term consequences for state and central Govt finances may lead the nation to economic instability.
When more and more people of any country prefer freebies to good governance, then the country in due course of time, virtually become a fertile ground for cruel and oppressive rulers. Eventually, the nation gets ruined. This is happening around the world. Sri Lanka and Greece are facing the brunt of spending economically unsustainable largesse. And many more countries may face such a situation soon.
“Don’t give anything free to the public; Only education, justice, and medical treatment should be made available to them. Freebies make them lazy and the country weak”. This was the opinion of former Indian Prime Minister Bharat Ratna A. B. Vajpayee on the freebies being doled out by the Governments in India.
During electioneering, the political parties do not leave any stone unturned to ensnare their voters and promise anything on the earth to stay or come into power. Some parties project themselves as mythological Divine tree-KalpataruVriksha- a wish-fulfilling tree. “Stand in its shade, and it will give you anything you ask of it. But ensure you vote for it to enjoy its shade”. But remember the ground upon which the tree stands, is paramount to both (the divine tree and the voters).
Trendsetters of Free schemes.
Several political parties like the Aam Aadmi Party and the All India Trinamool Congress offered tonnes of freebies before the elections whenever they are held. They also reaped the benefits to stay in power at the cost of the economic instability of the country. It is one of the easiest ways to enjoy dividends till national resources are choked and the economy is ruined. This trend is growing as many other political parties are imitating this action in search of power. In fact, after coming to power on promises of freebies claiming that they have the calculations to fund freebies sorted, the AAP government in Punjab asked the Centre for Rs 50,000 crore aid for two years as the state’s financial situation is very bad.
Freebies are the best gainful methods adopted by political parties to lure voters. The origin of freebie culture in the country can be traced to Tamil Nadu’s politics. Thereafter, political parties across the nation adopted this as one of the means to woo voters.
Political parties promise to offer free electricity, free water supply, monthly allowance to unemployed, daily wage workers, and women as well as gadgets like laptops, smartphones, bicycles, scooties, etc. to secure the vote of the people in their favour.
Assembly elections of 5 states held in 2022, witnessed the political parties announcing various schemes where they promised free electricity for households and free money to all women. However, these schemes are not feasible for society whether it is the social sector or the economic sector. These promises were made even when the states (were)are in dire financial straits.
India’s power distribution companies are suffering badly. In such circumstances, when past dues are already unpaid, offering free electricity and increasing the burden on the power industry is hardly something to be celebrated. Electricity needs are rising daily, and the need of the hour is to generate more power and provide electricity 24×7.
Why the alarming bells now?
In a prelude to the developments in the neighbouring country, Sri Lanka, a marathon meeting was held on April 2, 2022, wherein several top bureaucrats briefed Prime Minister Narendra Modi that the announcements of freebies in several states are financially unsustainable and that they needed to be persuaded to make a balanced decision that aligned political imperatives with economic stability.
Grave concern was expressed over populist initiatives and freebies promised by political parties during elections. They cautioned that if the trends persisted, some states may end up in the same situation as cash-strapped Sri Lanka or Greece.
It was pointed out that the pronouncements made by state governments like Punjab, Delhi, Telangana, Andhra Pradesh, and West Bengal are unsustainable and a remedy is needed now. Several political parties are providing free electricity, putting a strain on the state budget. Thus, it restricts their capacity to commit more finances to critical social sectors like health and education. Officials cautioned the Govt. that providing freebies before every election would have major long-term consequences for state and central government finances. They even warned that numerous states were in dire financial straits and would have gone bankrupt if they had not been a member of the Union.
States get a percentage of national taxes and GST, while their own revenue streams are restricted to alcohol excise and petroleum VAT, as well as property and motor vehicle registration fees. In such a position, efforts to mobilize resources are constrained, depriving them a foundation from which to spend that money on appeasements.
Freebies under the scrutiny of law
A petition was filed by advocate Ashwini Kumar Upadhyay and sought direction for the Centre to enact a law in this regard. On January 25, 2022, the Supreme Court issued a notice to the Election Commission of India (ECI) and the Centre on the issue of political parties wooing voters with the promise of freebies ahead of the assembly elections in five states. The Supreme Court said the promise of freebies was a ‘serious issue’.
Freebies of 2022 assembly elections and their implications.
Let us have a glimpse over the promises made by parties for the elections in UP and Punjab in 2022. In UP, SP has promised 300 units of free electricity to households, free power for irrigation, pension of Rs 1500 to poor and elderly women, which will cost Rs 25500 crore. The AAP has promised waiver of farm loans amounting to Rs 30000 crore, unemployment allowance of Rs 5000 a month for 25 lakh youth, Rs 1000 allowance per month to every woman voter (18+ age), besides 300 units of free domestic power – all of which will cost the exchequer Rs 55780 crore. BJP, which has faced the farmers’ agitation and subsequently repealed three farm laws, has promised free electricity for irrigation, two crore smartphones and tablets for students, and two free cylinders to Ujjwala beneficiaries for Holi and Diwali every year. Only Rs 26000 crore will be needed for all these.
Congress has promised smartphones and e-scooters to girls passing class 12, a monthly pension to 25 lakh elderly women and an increased honorarium to Asha workers, which will cost Rs 817 crore, a miniscule amount compared to others, perhaps in keeping with its prospect for winning.
As per 2021-22 BE, UP had a fiscal deficit of Rs 90130 crore and outstanding liabilities of Rs 6.53 lakh crore or 34 percent of GSDP. It paid Rs 41430 crore as interest during the last fiscal. The cost of these promises will have to be financed by borrowing, whose fiscal consequences would severely limit the state’s development and economic growth.
Punjab is one of the most heavily indebted states of India with debt: GSDP ratio exceeding 53 percent- its economy had contracted by 1.85 percent in the last fiscal. With fiscal deficit of over Rs 24000 crore in 2021-22 (BE) and outstanding liability of Rs 2.83 lakh crore -its annual interest burden alone is over Rs 20000 crore – it is fiscally sliding down a slippery slope. Despite knowing this, AAP has still promised 300 units of free electricity which will take the state’s power subsidy bill, already at Rs 10668 crore, past Rs 25000 crore, the ripple effect of which will be felt everywhere.
Tamil Nadu is considered the origin of largesse and has fined tuned freebies to a fine art. It always put some innovative ideas about freebies. In 2011 election, AIDMK had promised and delivered goats, gold as well as colour TV, blenders, and fans – despite some recipients not having electricity connections. It was worth Rs 1 lakh crore, many times more than the state’s total expenditure on education and health.
Let us discourage freebies culture:
That in a mature democracy like India, a political party only owes good and corruption-free governance and nothing else to the voters. The task of delivering good governance is difficult, fulfilling promises on freebies is simple and easy. The relief offered by freebies is only temporary and creates a vicious cycle of perpetuation in the society. It works like a pain killer but not a remedy to the underlying problems. Longer use of pain killer is detrimental to the health, eventually the patient loses hopes of survival.
The political class will resist any interference and the EC seems to have acquiesced. Only the SC can put a stop on this vicious practice and save the nation.
Doling out freebies is not a good practice and Governments should focus on long-term policymaking. These short-term measures show a myopic vision, and this type of vision is detrimental to the health of the nation. There is, simply, no justification for free rides; this is pure populism. There is no such thing as a freebie in economics because ultimately somebody has to bear the cost of the supposedly free giveaways. The concept is popularly known as “There’s No Such Thing as a Free Lunch”, which is the name of a book by Nobel Prize-winning economist Milton Friedman, who showed that everything has to be paid for by taxes if not today or tomorrow, then the day after.
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