Freebies: Digging financial graves; AAP copies DMK model

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By Pratik Gudhate

New Delhi, August 27: ‘A political party promising freebies cannot be considered as a bribe or corruption,’ stated the Supreme Court (SC) in the case of Subramaniam Balaji vs. Government of Tamil Nadu in 2013.

The court further added that all these promises by political parties should cater to two major points; firstly, it would improve the lives of the people, and secondly, the promises should be in accordance with the Directive Principals of State Policy.

The state has to decide and frame such policies, which directly provide benefits to improve the living standards and indirectly the means of livelihood for the people, in which the role of the apex body pertaining to be limited.

The SC further suggested to the state that it should also consider the state’s financial resources and the needs of the people.

Whereas, the political parties kept on promising free electricity, free water, free scooty, and free colored TV along with giving hard cash to the masses during their election campaign. Similarly, political parties have made freebies a normal practice without any defined target group. Realizing the impact of freebies and rising public debt in international settings, recently, the Supreme Court stated that a bench would be constituted to relook at its previous judgment on freebies.

Yet again it poses a question if the policies of freebies are the means for the livelihood of the people and improving their standard of living then what makes the Supreme Court intervene in this subject after nine years?

Historically, freebie culture became a concern in 2006, when the DMK in the state of Tamil Nadu announced the free distribution of colored TVs amongst the citizens. And a total of Rs 3687 crores had been spent in a time frame of five years for the same. If we look at the financial condition of Tamil Nadu during the same time period, the fiscal deficit was high. The state’s Fiscal Deficit had increased drastically from Rs 2251 crores in 2005-06 to Rs 16647 crores in 2010-11.

Source: Report of Controller and Auditor General of India 2010-11

Even though the financial health of the state was weakening, the Government was spending a huge amount on irrational freebies which were not contributing to the improvement of the living standards of people and the economic growth of the state.

Following similar footsteps for political gains, the Aam Aadmi Party came into power in the NCT of Delhi in 2015. The AAP Government in Delhi announced a 50 per cent slash in power tariffs up to 400 units and 20,000 liters of free water per household. Again in the 2019 elections, it further announced a 100 per cent electricity subsidy for up to 200 units in Delhi.

It is noteworthy that nothing comes for free and the cost of subsidies is incurred by the state. If we look at the financial health of the Delhi NCT, the fiscal deficit of Delhi stood at Rs 9972 crores and Rs 18776.67 crores in 2020-21 & 2021-22 respectively.

Also, from 2016-17, Delhi Government spent an amount of Rs 15800 crores on an electricity subsidy scheme.

Now, the Aam Aadmi Party is propagating this culture in other states as well. It is evident from the political campaign of AAP in Punjab with the announcements of free electricity to everyone and Rs 1000 cash transfers to all women in the state irrespective of their income adding an additional burden of Rs 12000 crore per year to the state’s treasury. Apart from Delhi and Punjab, the AAP is targeting Gujarat and Himachal Pradesh as well.

In this multiparty system, other parties are also patronizing the same bandwagon. The declaration of these freebies is becoming a new norm for the political parties to get the vote bank for their self-serving motives. Ethically, the political parties are responsible for framing policies for the state citizens for long-term sustainable development. However, political parties are busy making election eve freebie promises instead.

To make a state prosper, capital expenditure is necessary as it leads to asset creation and generating employment. To their dismay, such popular announcements are having a negative impact on the economy. The huge spending on such schemes is reducing capital expenditure in the state and eventually hampering economic growth.

Recently, the Reserve Bank of India published a report on ‘A risk assessment of state finances’ in which RBI cautioned the states on the deteriorated financial health due to freebies.

Now, the Supreme Court has also suggested to the political parties to curb these freebies statements during election campaigns. Thus, it is high time that all political parties should meet and talk about the long-term impact of this freebies culture and start focusing on the welfare measures supporting the national interest.

(Author is a research fellow at PPRC)