Understanding Freebie Culture In India Political Promises And Economic Consequences

Freebies have become a significant aspect of Indian politics and governance, with political parties offering various goods and services at zero cost to win electoral support or address social inequalities. These range from free electricity and water to cash transfers and consumer goods. This article explores the nature, impact, and controversies surrounding India's freebie culture, drawing on examples from different states and examining both the benefits and concerns associated with these political promises.

Definition and Types of Freebies in India

Freebies in India are defined as goods or services offered at zero cost, primarily to win electoral support or address social inequalities. The Reserve Bank of India (RBI) defines freebies as government welfare measures provided free of charge, such as free electricity, water, public transport, farm loan waivers, and subsidies.

Examples of freebies in India include: - Free laptops and mobile phones - Bus rides and public transport - Monthly cash transfers - LPG connections - Health insurance - Free televisions and household appliances - Subsidized utilities - Free bicycles for schoolgirls - Ration supplies - Farm loan waivers

These freebies are generally aimed at benefiting targeted populations in the short term and are often seen as a way of luring voters or bribing them with populist promises. However, there is a distinction between welfare measures and political freebies. Welfare measures are essential for maintaining the dignity of life, such as healthcare, education, and social protection, while freebies refer to mass distribution of non-merit goods that drain government revenue.

Historical Context and Evolution of Freebie Politics

Tamil Nadu stands out as the earliest and most prominent example of freebie politics in India. The state has long been a leader in using freebies as a political strategy, with successive governments distributing consumer goods, subsidies, and welfare benefits to build strong vote banks. Since the late 20th century, Tamil Nadu governments have introduced a range of giveaways, including consumer electronics, household appliances, and subsidies for utilities.

These measures, including free televisions, household appliances, and subsidized utilities, have profoundly influenced the state's electoral dynamics. While these freebies have secured political loyalty, they have also raised concerns about fiscal sustainability and the long-term impact on governance and development.

Over time, the nature of freebies has evolved. Conventional offerings like free water, free electricity, and free health services have lost some charm, with new offerings like free gadgets and cash incentives becoming more popular. In every election, political parties offer innovative, lucrative, and materialistic ideas of freebies to attract voters. Some independent candidates have gone as far as offering helicopter rides and even trips to the moon as campaign promises.

State-Specific Examples of Freebies

Different states in India have adopted various freebie schemes tailored to their populations and political contexts:

Tamil Nadu: As the pioneer of freebie politics in India, Tamil Nadu has implemented numerous schemes including free televisions, household appliances, and subsidized utilities. Successive state governments have distributed these goods to build strong vote banks, demonstrating both the political advantages and fiscal challenges of such approaches.

Delhi: Delhi's free electricity and water schemes illustrate freebies in an urban setting. These initiatives have provided essential services to residents while also serving as political tools to gain electoral support.

Telangana and Andhra Pradesh: These states use cash transfers like Rythu Bandhu and KCR kits to target farmers and women. Rythu Bandhu provides financial support to farmers, while KCR kits contain essential items for newborns and mothers. These programs highlight how freebies can be targeted to specific demographic groups.

Madhya Pradesh: The state offers Ladli Behna benefits for 1.32 crore women, providing financial support to female citizens.

Punjab: In Punjab, subsidies consume 16% of total revenue, raising concerns about economic sustainability and demonstrating the fiscal burden that extensive freebie programs can impose on state budgets.

These examples highlight both the political advantages and fiscal challenges of freebies, illustrating their complex role in India's democratic and governance landscape.

Economic Impact and Concerns

The economic impact of freebies in India has been a subject of intense debate. Critics argue that the continuation of free ration for 80 crore Indians for five more years, free bus rides for every woman, and subsidized gas cylinders for families above the poverty line place significant burdens on state finances.

The Sri Lankan Crisis has been cited as an example of economic collapse potentially brought about by lavish bestowing of freebies. NK Singh, chairman of the 15th Finance Commission, states that "the freebie culture is not a road to prosperity. It is a passport to fiscal disaster," adding that "a freebie is not a substitute to enhance economic growth and will, therefore, turn out to be quite expensive in the long run."

Key economic concerns raised by the Reserve Bank of India and the Supreme Court include:

1. Fiscal Burden: Excessive subsidies can push states into financial distress. In Punjab, subsidies consume 16% of total revenue, raising concerns about economic sustainability.

2. Misallocation of Resources: Funds meant for essential services like public infrastructure and government salaries are being diverted to fund freebies. In some states, delays in government employee salaries have been reported due to excessive welfare spending.

3. Encouraging Unemployment: Free ration and direct cash transfers may reduce the motivation to seek jobs, shrinking the labor force. Some reports suggest that in states with extensive welfare schemes, fewer people are looking for work.

4. Political Manipulation: Offering freebies during elections can unfairly influence voter decisions, affecting free and fair elections. The Supreme Court has warned against using welfare schemes as an election strategy rather than a genuine development tool.

5. Economic Distortion: Freebies can reduce incentives for work and distort economic decision-making, potentially leading to inefficiencies in resource allocation.

Social Benefits and Positive Impacts

Despite the economic concerns, freebies in India have also demonstrated several social benefits:

1. Public Outreach and Engagement: Government freebies can increase public trust and satisfaction by demonstrating responsiveness to citizens' needs.

2. Educational Benefits: A report by the NITI Aayog stated that freebies such as bicycles given to schoolgirls in Bihar and West Bengal increased their enrolment and retention rates, reduced dropout rates, and improved their learning outcomes.

3. Poverty Reduction: A study by the World Bank estimated that freebies such as food subsidies under the Public Distribution System (PDS) reduced the poverty ratio in India by 7% in 2011-12.

4. Healthcare Access: A survey by the NSSO revealed that freebies such as health insurance under the Rashtriya Swasthya Bima Yojana (RSBY) reduced out-of-pocket expenditure and catastrophic health shocks for below poverty line households.

5. Reduced Inequality: Freebies can reduce income inequality and poverty by redistributing wealth and resources more equitably.

6. Basic Necessities: Freebies provide basic necessities and social welfare to the poor and marginalized sections of society, helping to maintain dignity and improve quality of life.

These benefits highlight the complex nature of freebies in India, which can simultaneously address pressing social needs while creating economic challenges.

Constitutional and Legal Perspectives

The constitutional values of India as a "sovereign, socialist, secular, democratic republic" are sometimes at odds with the practice of freebie politics. When freebies are misused, they can undermine both fiscal sustainability and citizen dignity. As one commentator noted, "True welfare empowers. Misused welfare enslaves."

On August 26, 2022, the Supreme Court of India referred petitions to ban freebies distributed by political parties before elections to a three-member bench. The court is weighing the implications of such practices before coming to a conclusion. The Supreme Court has raised several key concerns about freebies, including their potential to encourage unemployment, misallocate resources, create fiscal burdens, and be used for political manipulation.

The Election Commission's hands are often tied in matters of freebies, as they are typically announced when the model code of conduct is not in force. Prime Minister Narendra Modi has decried the culture of "revdi" (a popular sweet), as he referred to freebies being announced and offered by political parties.

The Supreme Court has made a distinction between welfare measures and political freebies: - Welfare Measures: Essential for maintaining the dignity of life, such as healthcare, education, and social protection. These aim to accelerate human development and contribute to economic growth. - Freebies: Mass distribution of non-merit goods draining government revenue. These reduce incentives for work and distort economic decision-making.

Distinguishing Between Freebies and Subsidies

It is important to distinguish between freebies and subsidies, as they serve different purposes and have different implications:

• Freebies: Are goods or services given free without any charge to the users. They are generally aimed at benefiting the targeted population in the short term and are often seen as a way of luring voters or bribing them with populist promises.

• Subsidies: Are financial contributions or support provided to make goods or services more affordable. While subsidies can also be politically motivated, they often have a more structured economic rationale and may be designed to support specific sectors or populations.

Public/merit goods such as health and education expenditure have wider and long-term benefits, distinguishing them from political freebies. NK Singh emphasizes that "there are merit goods subsidies, say, in education and health sectors and the mid-day meal programme. These are not freebies."

The Future of Freebie Culture in India

The future of freebie culture in India remains uncertain amid ongoing legal debates and economic concerns. The Supreme Court's ongoing examination of pre-election freebies promises could lead to significant changes in how political parties campaign and make promises to voters.

As India continues to develop economically and socially, the balance between providing welfare benefits and maintaining fiscal sustainability will be crucial. The challenge for policymakers is to distinguish between genuine welfare measures that empower citizens and political freebies that may undermine economic health.

In an under-tax country like India, where tax evasion happens frequently, the feasibility of extensive freebie programs is particularly questionable. However, limited studies are available in India to determine the impact of freebies on the welfare of people, making evidence-based policy development challenging.

Conclusion

Freebie culture in India represents a complex intersection of political strategy, social welfare, and economic management. While freebies have provided immediate benefits to many citizens, including improved access to education, healthcare, and basic necessities, they have also created significant fiscal and economic challenges.

The distinction between welfare measures and political freebies is crucial for developing sustainable policies that address citizens' needs without undermining economic stability. As the Supreme Court continues to examine the legality and implications of pre-election freebies, and as India grapples with balancing social welfare with fiscal responsibility, the future of freebie culture will likely evolve.

For U.S. consumers and observers, India's experience with freebies offers valuable insights into the challenges of balancing political promises with economic reality, and the importance of distinguishing between genuine welfare programs and politically motivated giveaways.

Sources

1. Freebie Politics in India
2. Freebies in India: Boon or Bane?
3. Difference Between Freebies and Subsidies
4. Economic Impact of Freebies in India
5. Freebies in India - Current Affairs
6. Freebie Culture in Indian Politics
7. Freebies Frenzy in Indian Politics