25 Aug Freebies, a threat to India
Freebies, a threat to India
GS paper 2
Why are we talking about freebies?
SC has directed the central government to consult the finance commission on whether it is possible to regulate the distribution of freebies by political parties using public money.
What do freebies actually mean?
The dictionary meaning of the word freebie is something that you’re given for free. So, free power, healthcare, and education can, technically, be counted as a freebie.
But in Indian politics when the political parties promise to offer free electricity/water supply, monthly allowance to unemployed, daily wage workers, and free bus rides to women as well as gadgets like laptops, smartphones, etc a way to shield the vote of the people.
From where did it start?
- It was officially started, in 1953 in the assembly election of Tamil Nadu by the Late Kumaraswami Kamaraj, the then Chief Minister of the Madras state, who kind of bribed the voters, in the form of free education and free meals for school students between 1954 and 1963. Later, in 1967, Dravida Munnetra Kazagham founder CN Annadurai took the culture forward by promising 4.5 kg of rice for Re 1 if he were to be elected.
- Following this, in 1967, Dravida Munnetra Kazagham founder CN Annadurai took the culture forward by promising 4.5 kg of rice for Re 1 if he were to be elected
- Henceforward, the whole cycle went crazy and different parties trying to show up to each other offered gas stones, cash handouts, pieces of land, and even maternity assistance.
Who is actually paying for these freebies?
It is the very obvious answer is that we,the taxpayers are paying for the freebies that are being offered by the parties in India, to secure their position
Petition on freebies :
- Petitioner submits that fake promises of unreasonable freebies violate the ECI’s mandate for free and fair elections.
- The petition sought the Supreme Court to give a direction to the Union to enact a law in this regard.
- Distribution of private goods-services, which are not for public welfare, from public funds, directly violates Articles 14 (equality before law), 162 (executive power of a State), 266(3) (expenditure from Consolidated Fund of India), and 282 (Discretionary grants)of the Constitution.
- It sought a direction from the Election Commission of India, ECI to put an additional condition in the relevant paragraphs of the Election Symbols i.e.Reservation and Allotment Order 1968 which deals with conditions for recognition as a state party, that a “political party shall not promise/distribute irrational freebies from the public fund before the election”.
What has SC said about freebies?
- In the recent hearing of the Supreme Court on the matter of freebies, SC says that “isn’t the first time”.
- In 2013, the Supreme Court again state that “Budgets for freebies are going above regular budgets. This disturbs the level playing field. Freebies, undoubtedly, influence all people. It shakes the root of free and fair elections to a large degree.”
- At the time, the apex court had also said that separate legislation should be made on this issue.
But why there is a need for Freebies in a political campaign?
- Facilitates Growth: In India where the states have (or don’t have) a certain level of development, upon the emergence of the elections, there are expectations on the part of people which are met by such promises of freebies. There are some instances that show that some expenditure outlays do have overall benefits such as the Public Distribution System, employment guarantee schemes, support for education and enhanced outlays for health, particularly during the pandemic.
- Helps the marginally Developed States: In the states that have a comparatively, marginal level of development with a huge portion of the population under the poverty line, such kinds of freebies become need/demand-based and it becomes essential to offer the people such subsidies for their own development.
What are the Associated Issues With ‘Freebies’?
- Economic Burden:
i. Huge drain on state resources: farm loan waiver in Maharashtra resulted in an outgo of Rs 45,000-51,000 crore during the financial year 2020-21.
ii.Lack of specific outcome targets: No responsibility for the money spent. Telangana has committed 35% of revenue receipts, almost 63% of the state’s own tax revenue, to finance populist schemes which are cantered on freebies.
iii. Revenue side:
Negative impact on state-owned enterprises: leading loss-making PSUs.
March report from ICRA, subsidy payments by governments were estimated to comprise 16% of Discom revenues at an all -India level in 2021-22.
Low tax collections: due to Free electricity, free water, free rides etc., there is no realization of tax on these.
- Against Free and Fair Election: The promise of unreasonable freebies from public funds before elections unduly influences the voters, disturbs the level playing field, and vitiates the purity of the poll process. It amounts to an unethical practice that is just like giving bribes to the electorate. It can lead to the degeneration of the political agenda. This can even lead to the wastage of public resources on frivolous promises without any real outcome.
- Against Equality Principle: Distribution of nonpublic goods and services, which are for private purposes, from taxpayers’ funds before the election violates several articles of the Constitution, including Article 14 (equality before law).
- A Step Away from the Environment: When the freebies are about giving free power, it would lead to overuse of natural resources and the focus on renewable energy systems will also get distracted.
Measures to be taken to counter the negative impact of freebies
- Strengthening Election Commission: to bring the freebies under MCC and regulating manifestos by ECI.
- Demand-based freebies: with priority to DPSPs based or merit goods such as PDS system, education, health, etc. for greater prosperity.
- Improving transparency: to ensure it reaches real beneficiaries. E.g., a farm loan waiver reaches only actual farmers.
- Revising FRBM act: placing a limit on expenditure on loan waivers, free electricity, and water.
- Outcome-based budgeting: makes the departments accountable for their work, as done on Jharkhand recently fixes responsibility on debts.
- Differentiating Subsidies and Freebies: There is a need to understand the impacts of freebies from the economic sense and connect it with the taxpayer’s money. It is also essential to distinguish between subsidies and freebies as subsidies are the justified and specifically targeted benefits that arise out of demands. Educating the public: On effects of such freebies and need for fiscal discipline. For example, asking for the source of funds for such freebies through citizen groups.