Before every election, political parties in India promise certain health and education services, besides free water and electricity up to a limit. Many parties also promise what have come to be known as freebies such as television sets, laptops with the internet, bicycles, scooters, monthly petrol quotas, cell phones, and even ghee! If the promises are sincere, the winning party or coalition goes on to distribute these items among the people.
We have had sharply divided opinions for and against the practice for years. One view is, it’s bribery. And the freebies, anyway, come only from taxpayers’ money. It’s not private spending. The other view is that parties are free to make and keep promises “for the welfare of the people.”
Now the matter of “irrational freebies” has reached the Supreme Court, where the BJP-led central government wants freebies stopped, while Arvind Kejriwal’s AAP says its schemes are for the welfare of the people and, thus, must continue.
Let’s first understand what freebies are and how they differ from public welfare measures.
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WELFARE VS FREEBIES
There are certain services such as health, education, water, sewerage, electricity and transport that people cannot organise for themselves. That’s why they elect governments. These are all welfare measures. How much of these services should be free depends on the government’s fiscal space. If your expenditure-revenue situation is robust, give free services as much as you want. But the reality is, all states are often short of cash. We will come back to it later in the piece.
Then what are freebies? The dictionary meaning of the word freebie is something that you’re given free. But the actual meaning depends on who you are asking. For some, it’s an elitist construct. Others despise them as handouts, doles or sops. Distinguishing between a freebie and an essential service will need the proper context of time and place. For example, the mid-day meal scheme has gone national but when it was started in the early 1980s down south, many in the north could not digest the idea.
The Election Commission has told the Supreme Court that both “irrational” and “freebies” were terms open to subjective interpretation and have no precise legal definitions. During a natural disaster or a pandemic, providing life-saving medicines, food or funds may save lives but in regular times, they can be termed freebies, the commission has said.
According to a Reserve Bank of India (RBI) report, freebies are not merit goods or expenditures (such as public distribution system, employment guarantee schemes, and states’ support for education and health facilities). The document says freebies are provisions for free electricity, water or transportation, besides waiver of pending utility bills and loans, and other such benefits.
The Directives Principles of State Policy in Part IV of the Constitution says the state government should promote the welfare of people who are Below the Poverty Line (BPL) or cannot progress without support. But we have seen election manifestos often do not honour such distinctions.
ORIGIN AND MAINSTREAMING
In the 1990s, J Jayalalithaa of the AIADMK promised and distributed free sarees, pressure cookers, television sets, and washing machines in Tamil Nadu. Around the same time, the Akalis in Punjab pioneered a free-power regime. The root of the freebie culture’s expansion elsewhere also lies in how the Janata Dal (whose VP Singh became prime minister in 1989) kept giving birth to regional parties in the years to come. Below are some examples.
- Bihar: George Fernandes’ Samta Party (from which came Nitish Kumar’s JDU in 2003) in 1994, Lalu Yadav’s RJD in 1997, and Ram Vilas Paswan’s LJP in 2000.
- Uttar Pradesh: Mulayam Singh Yadav’s Samajwadi Party in 1992.
- Odisha: Biju Patnaik’s BJD in 1997.
- Karnataka: HD Deve Gowda’s JDS in 1999.
- Haryana: Devi Lal’s INLD and Ajit Singh RLD in 1996.
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The leaders of these parties had more or less the same ideology but competition among them was increasing. And freebies were an easy shortcut. In many cases, parties resorted to the freebie culture to cover up their governments’ failure in providing adequate jobs or skilling or ensuring decent livelihood for the people through appropriate economic policies. No wonder, many parties do not want freebies stopped. But winning elections and providing good governance are two different things.
In 2015, the Aam Aadmi Party in Delhi surpassed even the wildest of expectations and swept to power on the promise of free (up to certain limits) electricity and water. Even when AAP leader Arvind Kejriwal first came to power in Delhi (for 49 days) in 2013, he had done so by publically burning pending utility bills and promising to waive off arrears. He justified his actions by saying discoms and the then Congress government were looting the public in the garb of providing essential services.
COSTS OF FREEBIES
Experts believe that too much emphasis on freebies disrupts state finances and throws governments into a debt spiral. The RBI report mentioned earlier in the piece says freebies undermine credit culture, distort prices through cross-subsidisation, erode incentives for private investment, and disincentivise work at the current wage rate leading to a drop in labour force participation.
For example, Punjab’s electricity subsidy and its rising cost to the state exchequer is over 16 per cent of total revenues. Bailouts effectively mean money transfers from one state to another, and resentment. PM Modi has asked states to clear subsidies worth hundreds of crores of rupees to discoms. According to a report by analytical firm CRISIL, most states are in precarious debt situations, which will constrain their ability to spend on more significant public welfare measures.
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RBI ON FREEBIES
In its report prepared against the backdrop of Sri Lanka’s debt crisis, the RBI has linked the dire condition of state finances to “freebies”, particularly power subsidies that have ballooned the dues to discoms. The Sri Lankan government had gone for massive tax cuts and provided several free goods and services. The economy collapsed and the heavily indebted country defaulted on its payback commitments.
Another example is the South American oil-rich country of Venezuela that was prosperous till 1980. Successive governments then chose to offer their people almost everything free. Corruption became well-entrenched. Loan waivers further damaged the economy. The country is yet to recover fully.
So, what has been done to address the issue of freebies in India?
SC’s 2013 INTERVENTION
Under Article 324 of the Constitution, the Election Commission is mandated to conduct free and fair elections. The commission can suspend or withdraw the recognition of a recognised political party for its failure to observe the Model Code of Conduct (MCC). But the commission has seldom exercised this power.
Against this backdrop, the Supreme Court, while hearing a case in 2013, said, “Budgets for freebies are going above regular budgets. This disturbs the level playing field. Freebies, undoubtedly, influence all people. It shakes the root of free and fair elections to a large degree.” The Supreme Court asked the Election Commission to frame guidelines in consultation with political parties.
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EC’S 2014 GUIDELINES
In 2014, the Election Commission issued its guidelines that were made part of the MCC. They essentially said:
- Parties won’t make promises that may influence voters.
- Manifestos should also reflect the rationale for the promises and broadly indicate the ways and means to meet the financial requirements.
- Trust of voters should be sought only on promises which are possible to be fulfilled. In 2015, the commission asked parties to provide a copy of their manifestos.
But the problems of freebies have not ended. Here are some of the reasons.
WHY NO CURBS THEN?
To cut a long story short, the Election Commission needs more powers to ensure its guidelines are implemented. But its proposals for the same are mostly gathering dust. In 2004, the commission sent 22 proposals for electoral reforms, including powers to de-register political parties, to the Centre. Then in 2016, the commission sent a proposal to the Union law ministry to amend the rules and enable it to de-register a political party for gross electoral malpractices. Nothing much has happened.
CURRENT SC CASE
The Supreme Court is hearing a Public Interest Litigation (PIL) filed by Delhi BJP leader Ashwini Upadhyay that seeks directions to freeze the election symbol or de-register a party for offering freebies ahead of elections.
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On Thursday, the court said it’s a serious issue. “The poor need to be fed but public welfare needs to be balanced because the economy is losing money due to freebies,” the court said.
Here is broadly what the Centre has said during the hearing.
THE CENTRE’S STAND
- Freebies should be stopped because mindless announcements by opportunists are pushing the economy towards disaster.
- Public money should not be used to lure voters and the Election Commission should devise ways to deal with them.
- What comes into my left pocket is taken from my right pocket. That’s the long and short of it.
- PM Modi has, at public meetings, spoken strongly against the culture of freebies and subsidies, prompting a counterattack from the AAP.
: PM @narendramodi
— PMO India (@PMOIndia) July 16, 2022
THE AAP COUNTERCHARGE
-The AAP has told the court that absolutely essential health and education services offered by its government (in Delhi and Punjab) are not freebies.
Never in past 75 years has govt taxed basic food grains. Tax over petrol & diesel is over 1000 cr. They’re now saying all free things by govt should end, fee should be charged in govt schools, hospitals. They’re saying free rations to be stopped: Delhi CM Arvind Kejriwal pic.twitter.com/yE6MFXIXHE
— ANI (@ANI) August 11, 2022
-The AAP has said the PIL doesn’t talk about how the Centre has spent or foregone significant amounts from the exchequer and willingly taken on the concomitant fiscal loss for aiding the corporate sector and further enriching the rich.
SO, WHAT NEXT?
The Election Commission has said the issue of freebies should be left to voters as it cannot regulate state policies and decisions which may be taken by the winning party when they form the government. Such an action, without enabling provisions in the law, would be an overreach of powers, the commission has said.
In response to this submission, the court has proposed to set up a committee with representation from the Niti Aayog, the Finance Commission, the Election Commission, the RBI and political parties to study the issue. The Election Commission has welcomed the court’s proposal but said being a constitutional authority, it cannot be part of the committee. The commission, however, said it would give the recommendations of the expert committee its highest consideration.
The court will hear the matter next on August 17.
— ENDS —