Come elections, and political parties in India start dangling baits to lure the voters. So rampant is the practice that the Supreme Court has expressed its serious concern over the ‘freebie culture’.
Hearing a PIL on the issue on August 3, the apex court asked the Centre, Niti Aayog, Finance Commission and the RBI to brainstorm on the “serious issue of freebies announced during elections and put forth constructive suggestions to tackle it.”
On August 11, the Centre and the EC submitted their affidavits welcoming the court’s suggestion for a panel on the issue. However, the court rapped the EC after its affidavit was published in the day’s newspapers but not filed in the court on time. It also allowed the Aam Aadmi Party, which opposed the petition, to join the hearing.
Significantly, on August 3 also, the Centre had supported the petition and welcomed the court’s intervention. Solicitor General Tushar Mehta submitted before a Bench headed by Chief Justice NV Ramana that populist promises “distort the informed decision-making process of a voter” and pleaded the apex court to do something about it.
A l s o , addressing the Indian Information Service officers of 2018 and 2019 batches on August 9, outgoing Vice-President M Venkaiah Naidu cautioned against populist measures to garner votes by various political parties. He said the “freebie culture” has led to deteriorating financial health of many states.
His remarks came in the backdrop of Prime Minister Narendra Modi’s comments at an event in UP’s Jalaun last month. Addressing a public gathering after inaugurating the 296-km four-lane Bundelkhand Expressway, PM Modi warned people against falling for “revadi (freebie) culture” during polls, calling it “dangerous” for the development of the country. “Those behind this ‘revadi culture’ do not believe in building expressways, airports and defence corridors,” he said.
The Centre is of the view that if a political party in a state offers freebies such as free power or rations, the state Government should be transparent about the funding of such schemes and should not resort to off-Budget loans, which are not included while calculating the fiscal deficit.
During the recent elections to five state Assemblies, populist schemes and ‘freebie culture’ came under increased scrutiny because of their impact on the economy. Almost every other party is again busy promising freebies in the run-up to the elections in Gujarat and Himachal Pradesh, with Aam Aadmi Party chief Arvind Kejriwal emerging as the ‘champion’ of the freebie politics.
In fact, the issue of freebies and their disastrous impact on the economy had drawn concern from the Supreme Court, the Finance Commission and the Niti Aayog in the past also. But no effective mechanism to curb it could be evolved. The Reserve Bank of India, in a report published in June, linked the precarious state of state finances to “freebies”, particularly power subsidies. As many as 27 states and Union territories out of 36 are providing subsidised electricity to consumers, with at least ₹1.32 trillion spent nationwide in the 2020-21 alone, according to the Power Ministry data.
The rub is that the state governments practicing such freebies try to pass them on to the Union Exchequer in the form of grants to the states to bridge the gap in the revenue accounts after the devolution of Central taxes.
According to N K Singh, Chairman of the 15th Finance Commission, “While tax devolution is states’ inalienable right, the Finance Commission could be one of the institutional mechanisms to regulate spending on freebies, which destroy the foundation of macroeconomic stability.”