Freebies are a recipe for financial bankruptcy; the only way to avoid it is to prohibit political parties from promising them
Hearing a public interest litigation (PIL), filed by advocate Ashwani Dubey, seeking directions against ‘freebies’—a euphemism for benefits distributed by political parties using public money for garnering votes—on August 3, 2022, the bench of Chief Justice of India NV Ramana and Justices Krishna Murari and Hima Kohli sought suggestions from all stakeholders.
The stakeholders include beneficiaries and the people who are opposing these freebies, besides the government as well as organisations such as Niti Aayog, Finance Commission, RBI and Opposition parties, etc.
The suggestions have been sought on the composition of a committee which can go into the issue “dispassionately” and make recommendations. The issue has been haunting the country for almost a decade. Freebies, which in the past, found a place in a corner of the manifesto of parties, in recent years have occupied the centre stage and hold the key to winning elections.
Apart from abetment to corruption and erosion in governance ethics, these have serious ramifications for the State’s budgetary position and health of the economy.
The Union Government’s standards of financial propriety clearly lays down inter alia that “no authority shall exercise its powers of sanctioning expenditure to pass an order which will be directly or indirectly, to its advantage; and the expenditure from public moneys should not be incurred for the benefit of a particular person or a section of the people unless a claim for the amount could be enforced in a court of law or the expenditure is in pursuance of a recognized policy or custom”.
The reckless spending of the taxpayers money on freebies is neither a recognized policy/custom nor it is sanctioned in a court of law. It is blatant financial irregularity that amounts to bribing voters using public money solely for gaining advantage in electoral politics. An individual candidate distributing cash or giving liquor bottles (using his own pocket money) to garner votes is treated as corrupt practice, and rightly so, whereas a party bribing voters that too using public money gets legitimacy (albeit de facto).
Some experts have sought to justify freebies citing that ‘promise made by a party is a contract with the people’. This is a fallacious argument as redemption of such a promise is inextricably linked to use of taxpayers' money. Sans the latter, the former would be meaningless. On the other hand, making a promise not backed by resources (albeit public) is outright misleading.
Economic and financial implications
Unlike ‘normal’ budget expenses which are planned and backed by well-orchestrated efforts to garner revenue, additional financial liabilities imposed by the freebies promised in the election manifesto affect the budgetary position of the State in a totally ‘uncontrolled’ manner. For instance, free power and giving `1,000 per month to every adult woman promised by the Aam Aadmi Party in Punjab will dent the states’ budget by
` 20,000 crore annually. This will be at the cost of development expenditure.
Alternatively, this will result in additional borrowings and resultant increase in debt to unsustainable levels. At the end of five years, the afore-mentioned freebies alone will increase State’s debt by
`100,000 crore (this doesn’t include interest; including it, the impact will be even higher) on top of existing around `300,000 crore.
Ideally, any welfare measure should be aimed at the poor and that too for a limited period after which she should stand on her own. But, the freebies given by contemporary breeds of political parties defies this cardinal principle; for instance, `1000 per month to every adult woman in Punjab. This means, even a rich person is eligible if that person is a woman. By contrast, a man won’t be eligible even if he is poor.
Unlike a normal welfare scheme, which has a sunset date and gets terminated after the underlying purpose is achieved, the freebies offered by political parties have none. This is because such doles are not backed by any well-defined objective; herein the sole consideration is to influence voters. Freebies being at the foundation on which victory is secured, the concerned parties are prone to promising them election-after-election.
See things from the perspective of taxpayers. When tax revenue is used for giving subsidies to the poor - for instance, beneficiaries under Ayushman Bharat – it passes muster as a welfare measure. But, when it is used to give freebies to all, including the rich, it may even trigger non-compliance amongst taxpayers.
Finally, assured of assistance to meet most of their basic needs ‘perpetually’, the freebies cult is changing the mindset of people in a way that makes them complacent towards work. This can lead to a scenario whereby India’s demographic dividend would be converted into a demographic liability.
In short, freebies are a recipe for financial bankruptcy of the states and economic disaster. The only way to avoid it is to prohibit parties from promising them.
Judicial stand
The Supreme Court in July, 2013 in a judgment in S Subramaniam Balaji vs Government of Tamil Nadu & Ors had said that distribution of freebies of any kind influences all people. “It shakes the root of free and fair elections to a large degree,” the apex court had observed.
Yet, it had held that promises in the election manifesto cannot be construed as “corrupt practice” under the Representation of People Act (RPA), or under any other prevailing law and, hence, distribution of freebies can’t be stopped when the ruling party uses public funds for this purpose through the passage of Appropriation Acts in the state Assembly.
However, in a bid to give some relief from the menace, it had directed the Election Commission of India (ECI) “to frame guidelines that could ‘govern’ the contents of the election manifesto of all the recognized political parties in consultation with them as when it had acted while framing guidelines for general conduct of the candidates, meetings, processions, polling day, party in power etc”.
It further said “this can also be included in the model code of conduct - under a separate head for guidelines for election manifesto released by a political party - for guidance of political parties and candidates”.
The ECI never came out with any such guidelines. Meanwhile, freebies not only continued but proliferated, contributing in no small measure to the increase in the debt to gross state domestic product (GSDP) ratio of most of the states to at least 33 per cent—going up to as high as 50 per cent in Punjab.
In the present PIL, on January 25, 2022 the SC observed “this is no doubt a serious issue. Budget for freebies is going above the regular Budget. This disturbs the level playing field”. On August 3, 2022, it gave a sense that it is for Parliament (besides the ECI) to take the initiative for enacting a law on curbing freebies. But, before that, a committee should take a look at all pros and cons.
On August 17, 2022, the bench opined that the issue was complicated. All political parties being members of the committee and almost all of them sans the BJP, strongly in favour of freebies (arguing that it is their ‘Constitutional responsibility’), it is unlikely that we would ever see a law on curbing them.
(The author is a policy analyst.)
