Politicians promising free sops to people along with guarantees of development during election season in exchange for votes is common. But this was dragged into the limelight when Prime Minister Narendra Modi slighted Opposition parties and warned the youth not to get carried away by this ‘revari culture’.
A veiled dig at the Aam Aadmi Party (AAP) which has announced free power to people in poll-bound Gujarat and Himachal Pradesh, Modi’s remark invited a quick response from AAP convener Arvind Kejriwal. He said his government's schemes were not “freebies” but efforts to lay the foundation for making India the number one country in the world.
This begs the question: What is the difference between freebies and welfare sops? Can free power, cash and gold promised during an election campaign be considered the same as welfare services that the government is constitutionally obligated to provide for its citizens?
Welfare or freebie?
The term freebie on its own means something given out for free. The Election Commission of India (ECI) has said that there is no precise definition of the word "freebies" and "irrational freebies" and that the terms are subjective and open to interpretation.
The ECI told the Supreme Court on Thursday that freebies could be considered a "life and economic saviour" during dire times such as natural disasters and pandemics.
How we understand the term depends on the context and timing.
For example, during a pandemic or a natural disaster, the government providing free foodgrains, free vaccines or funds cannot be put under the freebie category. But the same in a normal situation can be termed a freebie.
The RBI has said that central expenditures like public distribution system, employment guarantee schemes like MNREGA and education and healthcare facilities are not considered freebies. What comes under the freebies tag then?
Who pays for freebies?
The central bank, in a bulletin, explained, “…the provision of free electricity, free water, free public transportation, waiver of pending utility bills and farm loan waivers are often regarded as freebies, which potentially undermine credit culture, distort prices through cross-subsidisation eroding incentives for private investment, and disincentivise work at the current wage rate leading to a drop in labour force participation. Some freebies may benefit the poor if properly targeted with minimal leakages, but their advantages must be evaluated against the large fiscal costs and inefficiencies they cause by distorting prices and misallocating resources.”
It may be said that freebies are coming out of the pocket of the taxpayers.
SC’s stand
During a hearing in 2013, the Supreme Court said that budgets for these 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,” the court noted.
The Supreme Court heard a PIL against “irrational freebies” and asked the Centre to take a stand on this “serious issue” recently.
The Court said Thursday a balance has to be struck between the economy losing money due to freebies and welfare measures undertaken by the governments as both are two different things.