30 Apr The Issues of Freebies
The Issues of Freebies – Today Current Affairs
(GS Paper-III, Economic Development)
Source: Indian Express
Today Current Affairs
Why in news?
The 15th Finance Commission chairperson Mr. N.K. Singh has warned about how the race to provide freebies to voters could prove expensive for the economy, life quality and social cohesion, leading towards fiscal disaster in the long run.
How do freebies hamper economic growth? The Hindu Analysis
The Freebies disturbs the basic framework of macroeconomic stability.In case of Punjab, some have predicted that the promise of freebies is going to have an additional impact of 3% of GSDP.
The freebies politics distort expenditure priorities. For example, Rajasthan Government’s decision to go back to the old pension scheme is regressive because 6% of the population, which is made up of civil servants, stands to benefit from 56% of the state’s revenues. The Hindu Analysis
The case of intergenerational equity leads to greater social inequalities because of expenditure priorities being distorted away from growth-enhancing items.
The Provision of free power, water, etc. distracts outlays from environment and sustainable growth, renewable energy and the efficient public transport systems.
The depletion of groundwater is an important issue to consider when speaking of freebies pertaining to free consumption goods and resources. Today Current Affairs
The Freebies lower the quality and competitiveness of the manufacturing sector by detracting from efficient and competitive infrastructure.
It raises the question of whether the time has come to consider recourse mechanisms like subnational bankruptcy.
The Positive role played by freebies : The Hindu Analysis
According to the Article 282 of the Constitution, the Union or a State may make any grants for any public purpose.
At various occasions, the freebies build a healthier and a stronger workforce, which is a necessary part of any growth strategy.
For instance , the spending in MGNREGA and subsidies in the form of food ration schemes. The Hindu Analysis
The subsidies going into education, such as for Smartphones and laptops have now become necessities for increasing productivity, knowledge and skills.
Future Course of Action : The Hindu Analysis
The politics built around the freebies is coupled with danger,there is great ambiguity regarding what “freebies” mean. So,It is required to distinguish between the concept of merit goods and the public goods in which the expenditure outlays have overall benefits.
The empowering of the public distribution system, employment guarantee schemes, support to education and enhanced outlays for health are considered to be desirable expenditures. Today Current Affairs
Further, It’s not about how cheap the freebies are but how expensive they are for the economy, life quality and social cohesion in the long run.
Various centrally sponsored schemes are dealing with classic subjects in the domain of the states, such as employment, food, education.
So there is a need to revisit the Seventh Schedule which classifies the subjects into three lists. The Hindu Analysis
The quest for the bottom means government deregulation of markets and businesses. Which means that over a period of time states compete to underscore each other in lowering down taxes, expenditure and regulation.There is a need for a race to efficiency through the democratic norms and concept of federalism where states use their authority to inculcate innovative ideas and solutions to common problems which other states can follow.
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plutus ias daily current affairs 30 April 2022 Hindi
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