When Equity Becomes a Mirage: The Freebie Debate in India
A JMM Election rally in Petarwar block in Jharkhand. Image credit X.com @KumarJaiMangal
India’s subsidy story is a tale of two classes—where welfare for the poor is politicized, while hidden subsidies for the wealthy slip quietly.
By P SESH KUMAR
New Delhi, October 2, 2025 — The debate around freebies in India is framed in stark moral binaries: either they are a lifeline for the poor or they are a fiscal poison pill. But once we strip away the rhetoric, the question is not whether freebies should exist, but whether they should dominate the political economy in the way they do.
The argument that “why should freebies be stopped at all” assumes that state largesse is synonymous with welfare. That is a sleight of hand.
Welfare, when it builds capacity—say mid-day meals that draw children into school, or free vaccines that avert public health disasters—is an investment in human capital. Freebies that promise free electricity to all, no matter whether the recipient is a marginal farmer or a real estate baron, drain resources without reforming structures.
They generate votes, not value. To stop freebies is not to abandon the poor; it is to replace blanket doles with targeted, accountable welfare.
The corporate loan argument strikes like a thunderbolt in this debate. More than ₹20 lakh crore of large corporate loans have been written off or slid into the swamp of non-performing assets.
This figure dwarfs every free laptop or mixer-grinder scheme that politicians advertise. It suggests a grotesque double standard: when a farmer defaults on a ₹50,000 loan, he risks humiliation or worse; when a conglomerate defaults on ₹5,000 crore, the system shrugs and moves on with a “technical write-off.”
The RBI itself clarified that “write-off” does not mean “waiver”—banks continue to pursue recovery—but the fact remains that recovery rates are abysmal, hovering around 15–20 percent in most cases. The anger against freebies for the poor seems hypocritical when corporate capitalism has quietly extracted far more from the public exchequer.
The refrain that “none has been arrested” captures another malaise. The Insolvency and Bankruptcy Code was meant to fix accountability, but in practice it has been more about restructuring than punishment.
Promoters often walk away from their companies while banks take haircuts as high as 70 percent. Fraud cases like Nirav Modi and Vijay Mallya show arrests happen only when public outrage reaches fever pitch.
For the vast bulk of NPAs, there is no criminal culpability attached, even when reckless lending, political pressure, and mismanagement are clear. Freebies are castigated as criminal waste; corporate write-offs are rationalized as “cleaning balance sheets.” The asymmetry is glaring.
Finally, the defence that “poor get benefited through freebies” is emotionally powerful but factually incomplete. Yes, free rations under the National Food Security Act during COVID saved millions from hunger. Yes, cash transfers and PM-Kisan payments provided instant relief.
But the same cannot be said for television giveaways or universal free power that often benefit middle classes more than the needy. The tragedy is that in the name of the poor, subsidies often leak to the rich.
Tamil Nadu’s free bus travel for women, for instance, improves mobility and participation in the workforce—arguably a justified subsidy. But free power to all farmers could have dried aquifers and benefited large landowners more than marginal peasants.
The critique, therefore, is not about freebies versus no freebies. It is about the selective outrage that brands one form of fiscal profligacy as virtuous and another as venal.
The Indian state has long subsidized both its rich and its poor, but while the subsidies of the poor are visible and electorally amplified, the subsidies of the rich are buried in banking jargon and corporate restructuring. Until India confronts this hypocrisy, the argument will remain hollow. The poor do deserve a safety net.
What they do not deserve is to be pitted against corporate bailouts, as if one must cancel out the other. The real reform is to bring equity, transparency, and accountability to both ends of the spectrum.
(This is an opinion piece, and views expressed are those of the author only)
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