Government Freebies: Hidden Downsides and Taxpayer Burden

Government Freebies: Hidden Downsides and Taxpayer Burden

Author :- Aarti Bhojwani, a student of LNCT University

FREE! FREE! FREE!

Who can resist the temptation of getting something without spending their hard-earned money? The word 'FREE' has an undeniable magnetic pull that goes beyond borders and cultures. It's a word that captivates hearts and minds. In our quest for comfort and ease, it's true that many are drawn to the idea of getting something for nothing. The idea of effortless gain is like an irresistible melody that's hard to resist.

But can 'freebies' be truly labelled as entirely cost-free? The road to 'free' often leads through fields of hidden costs. What may be labelled as 'free' can frequently be subsidized by someone else or financed through taxes, hidden fees, or other indirect means. In essence, 'free' rarely comes without strings attached.

India has a longstanding history of a social welfare system that provides essential resources to its impoverished and vulnerable citizens, aiming to enhance their socio-economic well-being. However, these welfare initiatives are occasionally characterized as 'handouts' or 'freebies,' they are widely viewed as manipulative and aimed only at influencing electorates. In 2022, while inaugurating the Bundelkhand Expressway in Jalaun, Uttar Pradesh, Prime Minister Narendra Modi raised concerns about what he termed the 'revadi' culture (a culture of 'freebies'), and called it as harmful to the country's progress and development. Subsequent to the Prime Minister's remarks, a member of the ruling party initiated a Public Interest Litigation (PIL) in the Supreme Court (SC), calling for stricter regulations regarding the commitment and distribution of freebies by political parties. The PIL contended that the 'dispensation of freebies from public funds' had the potential to influence voters, disrupt the equitable nature of elections, hinder fair electoral processes, and compromise their integrity.

A decade ago, discussions on the topic of freebies in India were already ongoing. During this time, the Supreme Court faced several petitions related to freebies. Notably, in the case of Subramaniam Balaji v. the State of Tamil Nadu (2013), the bench acknowledged that the distribution of freebies did influence the public and had the potential to impact the fairness of elections. However, the Court ruled that the promise or distribution of such freebies should not be equated with bribery or corruption. The Court further stated that it could not dictate to the government how to allocate public funds. Building upon this ruling, the Election Commission of India (ECI) in 2014 mandated that political parties provide explanations for their promises and urged them to make commitments that could be realistically fulfilled.

The dictionary defines a 'freebie' as something given or provided without any cost. In June 2022, the Reserve Bank of India (RBI) offered its own definition, describing 'freebies' as 'public welfare measures provided free of charge.' The RBI further points out that 'freebies' can be differentiated from public or merit goods, like education and healthcare, as well as other government expenditures that offer broader and longer-term advantages. Nevertheless, distinguishing between welfare or 'merit' goods and 'freebies' or 'non-merit' goods can be a complex task.

In India and many other nations, there is compelling evidence suggesting that the allocation of welfare benefits is linked to a practice called patronage or clientelistic politics. This means politicians provide benefits to people in exchange for their votes to gain support from different groups like women, farmers, and youth. In the absence of comprehensive, long-term strategies for asset-building and development, political leaders often resort to distributing tangible, private material goods that directly and immediately affect the lives of voters. This approach allows them to secure reliable political gains.

The recent debate over freebies has been sparked by the Central government, which is pointing fingers at the states for implementing what they see as unsustainable amounts of freebies and subsidies to win elections. However, both the Central and state governments share responsibility for the increasing prevalence of freebies. Over the years, both have allocated substantial portions of public funds to finance their welfare programs.

There are rightful concerns about the long-term negative effects of a runaway ‘freebies’ culture. At the same time, solutions are not easy, particularly in a highly competitive democratic polity. This complexity arises from the porous nature of social welfare programs, which have become increasingly attractive to voters. If both the Central and state governments allocate the funds typically spent on freebies towards long-term development initiatives for the nation and its people, it would yield more substantial benefits compared to the distribution of freebies. This approach would also ensure the responsible utilization of funds, considering that these resources are, in one way or another, sourced from taxpayers. Investing in long-term development can lead to sustainable improvements in education, healthcare, infrastructure, and other critical areas.