CULTURE OF FREEBIES

(General Studies II – Governance section – Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.)

• The distribution of freebies or “populist giveaways” has become a pervasive practice in Indian politics, with political parties frequently promising goods, services, and financial incentives to voters.
• From smartphones and farm loan waivers to free electricity and water supply, these promises are often designed to attract short-term voter support.
• While freebies can address immediate needs, this trend has sparked a national debate about the ethical, fiscal, and governance implications.

Key Issues with the Freebies Culture –

1. Fiscal Burden: Freebies strain government finances significantly. States allocating a substantial portion of their budgets toward fulfilling these promises may compromise spending on essential services like healthcare, education, and infrastructure. This practice is unsustainable, as it leads to high public debt and limits the government’s ability to respond to economic crises.
2. Distorted Voter Priorities: Freebies may shift voters’ attention from evaluating long-term policies, governance quality, and candidate competency. The emphasis on short-term benefits can discourage voters from considering more substantive issues, thus weakening democratic accountability.
3. Encouragement of Dependence: The reliance on free goods and services fosters a culture of dependency, reducing motivation for self-sufficiency. For instance, continuous loan waivers for farmers discourage financial planning, while free utilities can reduce the incentive for conservation and responsible usage.
4. Economic Distortions: Freebies impact local markets by distorting demand patterns and creating artificial dependencies. Free power and water, for instance, contribute to resource overuse, such as groundwater depletion and unsustainable agricultural practices. Such distortion hinders balanced economic growth.
5. Inequitable Resource Allocation: Freebies may disproportionately benefit specific groups, leading to an uneven distribution of resources. While rural agricultural communities often benefit from loan waivers, the urban poor may miss out on equivalent support, exacerbating inequalities.
6. Erosion of Governance Standards: When political parties prioritize short-term gains over policy-driven governance, it can lead to a decline in administrative standards. Public resources are increasingly viewed as means for political gain, undermining public trust in government institutions.
7. Environment and Resource Depletion: Free utilities, especially water and electricity, contribute to the overuse and eventual depletion of natural resources. Free electricity, for instance, has led to over-extraction of groundwater for irrigation, particularly in states like Punjab, threatening future agricultural productivity.
8. Loss of Competitive Federalism: The race to offer more attractive freebies diminishes healthy competition among states to foster development through policy innovation and economic growth. Instead, states may fall into a cycle of political competition that emphasizes immediate handouts over long-term progress.
9. Diminished Investment in Long-term Growth: Freebies divert funds from developmental projects and social infrastructure investments, slowing economic growth. Long-term growth is essential to reducing poverty sustainably and raising living standards; freebies undercut the resources available to make these investments.

Way Forward –

To address the challenges posed by the freebies culture, several strategies and reforms are needed, combining legal frameworks, financial discipline, and electoral reforms.

1. Implementing Fiscal Discipline Measures:
   • The central and state governments must adopt stricter fiscal management policies to limit unsustainable expenditure on freebies. Regular fiscal audits and public disclosure of fiscal health indicators can foster accountability.
   • The Fiscal Responsibility and Budget Management (FRBM) Act, which sets targets for fiscal prudence, should be strengthened, with penalties for excessive spending on populist measures.
2. Transparency and Accountability in Election Promises:
   • Political parties should be required to submit detailed cost-benefit analyses of freebie promises, including their financial impact and sustainability, before elections. The Election Commission of India (ECI) can establish guidelines for campaign promises that ensure economic accountability.
   • Voters should be informed about the fiscal implications of freebie promises. Making campaign finance reports public would enable greater transparency.
3. Promoting Competitive Federalism Based on Performance:
   • Encourage states to adopt performance-based competition by evaluating governance quality, economic growth, and welfare outcomes. Central grants could be linked to state performance in sustainable growth areas rather than unregulated populism.
   • Innovative welfare schemes that emphasize empowerment (e.g., skill development, health insurance) rather than giveaways should be incentivized.
4. Educational and Awareness Campaigns for Voters:
   • Educational campaigns highlighting the long-term consequences of freebie culture could help voters make more informed decisions. Civic awareness initiatives can shift focus to issues such as governance quality, economic progress, and sustainable welfare measures.
5. Drawing Inspiration from International Best Practices:
   • Countries like Norway and Sweden have set up Sovereign Wealth Funds (SWFs) from natural resource revenues, directing funds toward public services, pension funds, and other long-term benefits. India could consider a similar model to safeguard funds for developmental projects and avoid misallocation.
   • In South Korea, campaign finance and public expenditures are heavily regulated to avoid unsustainable promises. Electoral reforms in India can adopt such models to discourage undue competition over freebies.
6. Balanced Welfare Programs:
   • Welfare schemes that enhance productivity and self-reliance should be prioritized over non-targeted freebies. For instance, instead of free electricity, subsidies for renewable energy adoption in households and businesses could foster energy security and environmental sustainability.
   • Health and education support, such as scholarships, skill development programs, and health insurance for low-income groups, are long-term investments that empower citizens while being fiscally responsible.