We have often heard the word “free”. For many, it is a relative term for independence and freedom to exercise their fundamental rights and so on. Many also relate it to a marketing gimmick.
For instance, schemes like buy-one-get-one (BOGO) falls in this category. Often, one gets lured by such marketing campaigns, without realising the trick behind these smartly-labelled packages. In general, a person may buy only one product or may not even buy but BOGO certainly influences one to buy two, thereby generating more sales and revenue.
Then, there are freebies or revdis (a north Indian sweet) as many politicians popularly call them. Of late, we have witnessed a unique debate on the economic viability of freebies. Prime Minister Narendra Modi in one of his speeches coined this new term called “revdi-culture”. He warned the youth against the attempts being made by Opposition parties to collect votes in the garb of freebies, putting the financial viability of the state at risk.
The issue came up for discussion in January when a public interest litigation was filed in the Supreme Court by an advocate Ashwini Kumar Upadhayay, who incidentally, is also a former BJP spokesperson. The petition sought de-registration of political parties that promise “irrational freebies” during election campaigns. The petitioner argued that such tactics are a threat to “democratic values”. They are akin to bribing the voters. The issue would not have received much attention but for Modi’s speech.
Soon, the term was used by a number of BJP leaders to attack the policies adopted by the Aam Aadmi Party and others. Unfortunately, there is no concrete definition of freebies in political parlance. Former Election Commissioner O P Rawat did make an attempt to define freebies in an interview to the Economic Times. “Except for subsidies given to promote food production, direct benefits for employability, educational attainments, sports, cultural activities, free medical care to the poor, free food to those who are destitute to sustain themselves and affirmative action for weaker sections, including women, everything else is a freebie.” Free power, free cell phones, free laptops etc., would fall in the ambit of freebies.
While this definition does give an idea of what can be termed as freebies, yet there is a very thin line between doles and a programme aimed at social welfare. For instance, “Mukhya Mantri Balika Cycle Yojana” in Bihar and a similar scheme in Haryana and Punjab might be termed as a freebie. But such schemes have helped in improving attendance and the retention rate of girls and Dalit students in schools. It has also solved the issue of non-availability of public transport for children in some of the remotest places of the country.
A higher attendance/retention rate would mean more education years, leading to empowerment of girls and students from marginalised communities. The social benefits of such schemes may not be visible on the face of it.
Similarly, distribution of free sewing machines certainly helps women in becoming financially independent while contributing to the economic growth of the country as well. In other words, a scheme should not be labelled as a freebie merely by looking at its nature.
While hearing the PIL, the Supreme Court directed the constitution of an expert body, comprising various stakeholders like the Niti Aayog, the Law Commission, the Finance Commission, the Reserve Bank of India, representatives of the ruling party and the Opposition to find a solution to the issue of freebies and poll promises. Not only this, it invited suggestions from the petitioner, Central government and the Chief Election Commissioner. The Election Commission has, however, decided to stay away from the process.
The Apex Court also remarked that unchecked freebies shall lead the country towards an economic disaster. The political parties have a vested interest in continuing such exercises. The expert body shall come up with a practical solution.
Meanwhile, the Reserve Bank of India in its annual report has warned against subsidies, which has burdened the state government finances to a large extent. The Covid-19 pandemic has worsened their fiscal situation. The excessive freebies in the form of free electricity have increased contingent liabilities and dues from the power distribution companies.
The report also warned about a financial crisis in the aftermath of the economic crisis faced by neighbouring Sri Lanka. “The recent economic crisis in neighbouring Sri Lanka is a reminder of the critical importance of public debt sustainability. New sources of risk have emerged in the form of rising expenditure on non-merit freebies,” it said.
The ratio of debt to gross state domestic product is expected to cross 35 percent in many states and 45 percent in Punjab by 2026-27. Many states have been spending a large portion on their income on freebies alone.
While the RBI might have pressed the panic button after looking at the issues faced by neighbouring Sri Lanka and the financial data, it is important to look at this scenario through the lens of the socio-economic background of the people. It is a fact that the bottom 50 percent of India’s population have only 13 percent share of the total income while the top 10 percent lap up 22 percent.
In terms of wealth distribution, the bottom half has only 6 percent of the total wealth. The top 10 percent have more than 65 percent wealth. If this is the state of income and wealth distribution, how will the bottom 50 percent survive, without support from the state or the Centre?
While Modi has been speaking against the revdi-culture, the fact is, he is still continuing with the free foodgrain distribution that was started in the wake of Covid-19 pandemic. This is despite the fact that we have been told that the economy has bounced back and the country is expected to grow at 7.1 percent. If this is true, then why should people be given free foodgrains? Not only this, in the name of doubling farm incomes by 2022, a cash-distribution scheme for the farmers was introduced. Does it not fall in the ambit of revdi-culture? There are many other schemes like ujjwala (the free LPG connection scheme), the PM Aawas Yojna (Offering subsidies on loans and cash support for construction of houses), and various insurance schemes. How will these schemes be categorised?
Be that as it may, the fact is the job market is still sluggish. Whatever be the growth rate, industry has not yet recovered from the economic shock it faced during the pandemic. The informal workers, who had some source of income before the pandemic, are still jobless.
People are still dependent on schemes like MNREGA for their survival. In such a scenario, should the government engage in a political discourse, labelling welfare schemes as revdis? It is important to mention that India is a welfare state. The government should be guided by the needs of the poorest of the poor, not by the whims and fancies of the politicians.
True, there is a need to regulate the incessant and unfounded doles that are promised during election campaigns. At the same time, it is necessary for the government to bridge the huge income disparity between the rich and the poor. After all, people elect the government with a purpose of development, which should remain at its core while maintaining transparency, fiscal cooperation and macroeconomic stability. There should not be any room for arbitrary decision-making.
(The writer, a company secretary, can be reached at email@example.com)