During the election season, politicians distribute freebies to the people. Freebies has become election decider; jumla is not enough.
After Mughal’s brutality, nepotism, tukde gang and Nehru’s mistakes, there is a new enemy called freebies that is slowing down the economy. Our Prime Minister suggested to keep away from the freebies culture – says, it will make our economy like Sri Lanka. Suddenly,the government is talking about economics – why take the leap from divisive politics and talk on economy? Surprising, isn’t it? Actually, all regional parties took inspiration from 15 lakh jumla. Now, election is incomplete without freebies being announced. Many state governments delivered freebies like ration, electricity, water, and making public happy. At least people can manage household and political parties can stay in power.
In this article, let’s distinguish between welfare and freebies. Can we become a welfare state, which was talked about in the constitution? Which is the party giving most freebies: regional or central? Can freebie be given sustainably?
It is true that many states are in debt, and taking loan and depositing their future revenues in Escrow – Andhra Pradesh, UP, MP, Punjab, Himachal Pradesh etc. Escrow means a guarantee to bank of future payment, but how will state run in future if all revenue goes to the bank? And, you know very well what happens when you cannot pay the bank! It does not end good for the borrower.
Off budget borrowing is also a problem, Telangana – Rs56,766 crores, Andhra Pradesh – Rs28,837 crores, UP – Rs24,891 crores, Kerala – Rs10,131 crores and Karnataka – Rs9,981 crores. Centre is saying that this is not the right way, and the states cannot keep borrowing. States reply, pot calling kettle back, centre has borrowed a lot as well. The centre charges GST of which states don’t get their due. So, a war has erupted between the centre and the states. States are saying that centre is playing politics.
What is the difference between freebie and welfare economics?
Understanding the freebie economics
Kumaraswami Kamaraj, Chief Minister of Madras state, was a very popular leader back in 1960s. His statue was built by Nehru, and American Vice President Humphry called Kamaraj as one of the best leaders. What was the reason behind it? It is because Kamaraj focused on education and industrialization, more than on power keeping. He started the Mid-day Meal Programme, free uniform for students and free education for weaker section. He got an electoral advantage because of it. But, was it freebie?
Now, recently, colour TV was promised by Karunanidhi in the public. In 2016, Jayalalitha promised mobile phones, laptop and even gold. Needless to say, these are freebies, as well as jumla. This does not benefit the country or the individual.
The distinction between freebie and welfare is not clearly outlined, hence the debate. But roughly it can be understood that when government spend expenditure on healthcare, PDS, education, employment generating schemes – these are called welfare measures. Whereas, Free TVs, bicycle, kettle, gold etc., also announced just before the elections – these are Freebies. There is no long term benefit to country by freebies.
Because of these freebies announced, state expenditure on subsidies keeps on rising, especially during the pandemic. As per the Comptroller and Auditor General (CAG), the state’s expenditure on subsidies in 2020-21 was 12.9%, and in 2021-22 was 11.2%. Top 5 states with largest increase in subsidies over the last 3 years: Jharkhand, Kerala, Odisha, Telangana, Uttar Pradesh. Besides, Gujarat, Punjab and Haryana spends more than 10% of their revenue expenditure on subsidies. Expenditure on subsidies is not wrong, but spending more on subsidies will hurt the state economy.
Thus, Supreme Court called for a panel to look into the freebie issue. But it irked the politicians. Jayant Singh tweeted on freebie provided to judges, as an act of retaliation.
By the way, the story of Sri Lanka is entirely different, they made some hasty decisions that backfired.
Welfare For Greater Good
- There is a program in Andhra Pradesh: Ryuthu Bharosa. Income support to farmers – Rs15,000 per Acre per annum is given by the Chief Minister (70% population is engaged in agriculture).
- Jagananna Vidya Deevena Scheme – Under the scheme, government will provide ‘full-fee reimbursement’ to eligible students who are native to the State of Andhra Pradesh, pursuing degree education in the State.
The BJP that is vocal against this freebie culture announced free electricity during Punjab election campaign. In UP, this same BJP government promised free scooty and gas cylinder to the people. BJP launched a successful PM Gareeb Kalyan Yojana, which benefitted many.
Were these above mentioned schemes, freebie or welfare scheme? Aam Admi Party believes that PM mentioned freebie because AAP decided to contest and give free policy benefit in Gujarat.
Businessmen getting real Freebie
The spokesperson of Congress, Gourav Vallabh attacked BJP on freebie issue, saying: Of the Rs9.92 lakh crore loan written off by banks in the last five years, Rs7.27 lakh crore is the share of public sector banks. He further says that the government has admitted in an answer in Parliament that only Rs1.03 lakh crore was recovered of the amount written off by it. Also, he says, when there will be a discussion on the loss of Rs1.45 lakh crore per year to the government due to the reduction in corporate tax rates.
Big corporates getting reduction in tax rate, and poor getting free basic facility, called freebie. What about the rich getting loan write off?
Congress gave Schemes like MGNREGA, Mid-Day Meal Scheme, Food Security Act etc. These are all welfare schemes that benefited BJP too. Congress is in fact saying that MSP (Minimum Support Price) is also not freebie; it is a support welfare scheme for farmers.
8% of our GDP is spent on social sector – education, healthcare etc. France spends 31% of GDP on education, health, public transport, sick leaves etc., whereas, we only spend 8%. The Nordic countries like Sweden, Norway etc. also spend higher on welfare schemes. Are those countries giving freebie? Or making good use of tax, for making lives better? These countries don’t come up with these plans just before the election; they do it for 5 full years.
USA writes off student loan of $300 billion, which is a major issue there. Like we have issues here with ‘Bollywood’, US has student loan issue. $10,000 loan written off a student, and $20,000 off it from a weaker sector. This is for families that make less than $125,000. Trump also announced $2 trillion stimulus package: $500 billion for big companies, $400 billion for small companies and cheques given to individuals during the pandemic.
It helped people survive during the pandemic. We can surely debate its impact on economy, but it’s not called freebie, it’s welfare.
Will our country collapse if people are given help, or isn’t it what a government is supposed to do? Schemes are measures that generate economic value, like Start-up India, Skill programmes etc. – these aren’t freebie, but welfare schemes. In times of distress, like pandemic, freebies will have to be given also. But yet, there are conditions –
- Debt trap should be avoided, if state cannot afford to give freebies, then loan should not be taken.
- Freebies and jumla before election should be stopped.
Then, what is the solution?
No freebie announcement right before election – distribute it in your full tenure. These announcements of Scooty, mixer, grinder, gold, etc. must stop before election.
So, welfare scheme is necessary, and constitution ensures that big money is given back to common needs of people. Hope that there are more welfare schemes for all, not freebies.
Mahabahu.com is an Online Magazine with collection of premium Assamese and English articles and posts with cultural base and modern thinking. You can send your articles to firstname.lastname@example.org / email@example.com ( For Assamese article, Unicode font is necessary)