Indian political leaders use various populist methods to garner votes from citizens; freebies being the most pursued method. Any free goods or services the government offers citizens is a government freebie. It includes a scheme designed to benefit a section of society. The trend of freebies has gained more velocity in recent times. The state parties have been giving away smartphones, accessible electricity units, free public transport rides, and irrelevant gift hampers to attract prospective voters. This culture is often called “Muftkhori” or “Muft-Uphari” in Hindi.

There should be a clear differentiation between the welfare schemes and the freebies. The term freebies is a broader concept. It cannot be confined, as welfare is different for all the sections of the society. Offering bicycles to the poor may be a welfare scheme for the upliftment of their standard of living, and a freebie to the upper middle class to garner votes.

Focusing on skill development rather than providing freebies to the poor and needy would ensure their upliftment. Ensuring that providing them with services doesn’t result in laziness or them becoming entirely dependent on the politicians.

It is not about how cheap the freebies are but how expensive they are for the economy.

The culture feels like competitive bidding that offers subsidies and freebies, with powers of unplanned promises and unnecessary expenditure. The freebies are not incorporated into the budget proposals, draining the public spending of the states. Hence, this results in a heavy burden on the financial health of states because of limited resources.

Consequences of freebies

  1. The continuity of freebies brings about the never-ending crisis to the state’s fiscal and economic health. The parties offer more lucrative bids to minimise the risk of losing elections.
  2. Macroeconomically Unstable: Freebies raise prices due to the disruption in demand-supply dynamics. It also leads to developmental challenges across the states on issues that can have long-term impacts, like the deficit in budget financing and unemployment leading to lack of revenue generation. Also, the funding for freebies which has been budgeted from the Central transfers, distorts expenditure priorities.
  3. DISCOMS: The power sector accounts for much of the financial burden of state governments in India, both in terms of subsidies and contingent liabilities. Data reveals that Discoms in India owes Rs 109,640 crore to power generators. This deficit has been rising steadily. PM Modi has put the light on running losses at Discoms and blamed it on the freebies given by the states. Vote for freebie culture is running at the cost of an unsustainable future and subsidising electricity for voters, resulting in high power bills of the government that have remained unpaid and operating at losses of double digits. 
  4. Manufacturing and Agriculture sector: Providing loan waivers as freebies will result in a vicious debt trap for farmers due to the instability of the credit or banking system. Freebies lower the quality and labour productivity resulting in low competitiveness in the manufacturing sector across global markets.
  5. Unsustainable Growth and Development: When parties offer a free quantum of electricity and water, they take a step away from an endurable environment and a sustainable future. They are resulting in the depletion of resources and potable water tables.

Parties must offer equity to a state and equal opportunities for all. States with comparatively lower levels of development have a significant population living in poverty; thus, welfare schemes could help uplift the lower strata. It differs from equality. Equity focuses on having the same standard of living for all the people in the state, whereas equality provides the same benefits to both the affluent and underprivileged. Equality doesn’t reduce differences across society’s lower and upper sections. Introducing welfare schemes can offer equity. The foundation of the welfare schemes meets the constitutional obligations (Directive Principles of State Policy), which serve citizens through free vaccinations, public distribution systems, and higher job opportunities.

Educating and bringing awareness to the citizens can help them differentiate between the trend of irrational freebies and welfare schemes. Thus, a clear differentiation should be made between welfare schemes/subsidies and freebies.

Mansi Chopra is Research Intern, CPPR

Views expressed by the author are personal and need not reflect or represent the views of the Centre for Public Policy Research.

Leave a Reply

Your email address will not be published. Required fields are marked *