Why in the News?
In 'Tamil Nadu Power Distribution Corporation Limited v. Union of India' case, the Supreme Court (SC) raised concerns about the 'Freebies' culture across states.
Highlights of SC Observations
- Direct cash transfer schemes without distinction between those who can and cannot afford certain services may disincentivise work and earning with dignity and self-respect.
- Indiscriminate largesse funded by taxpayers could undermine fiscal discipline and economic stability and hamper nation-building.
- States should focus on long-term development plans, than such election promises.
About freebies
- RBI defined freebies as "a public welfare measure such as that is provided free of charge".
- E.g. Provisions of free electricity, free water, free public transportation, loan waivers, etc.
- As per RBI, freebies can be distinguished from public or merit goods such as education which have wider and long-term benefits.
Śreya vs Preya in the context of FreebiesThe Katha Upanishad draws a timeless distinction between Śreya (the enduring good) and Preya (the fleeting comfort), urging the mature mind to choose long-term benefit over immediate gratification. This can be applied to fiscal policy in the context of the freebie culture.
In other words, the country stands to gain immensely when it follows delayed gratification and national discipline. By choosing Shreya, the state prioritizes capital expenditure (CapEx) on infrastructure, which offers a higher multiplier effect on growth, over the Preya of UCTs. |
Constitutional and Legal Perspectives of freebies
- Directive Principles of State Policy (DPSP):
- Articles 38: The State to secure a social order for the promotion of the people.
- Article 39: Ensure men and women have adequate means of livelihood; prevent concentration of wealth.
- Article 41: Right to work, to education and to public assistance in certain cases
- Supreme Court judgement:
- Subramaniam Balaji case (2013): SC upheld distribution of colour TVs, laptops, etc. to deserving persons as consistent with the DPSPs.
- Section 123 of The Representation of the People Act (RPA), 1951 prohibits "bribery," defined as any gift, offer, or promise by a candidate or their agent to induce an elector to vote.
- Subramaniam Balaji case (2013): SC upheld distribution of colour TVs, laptops, etc. to deserving persons as consistent with the DPSPs.
- Election Commission of India Guidelines for election manifestos: Included in the Model Code of Conduct (MCC), require parties to avoid promises that vitiate the purity of elections.
Positive Impact | Negative Impact |
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Way forward
- Policy Reforms
- Fiscal Prudence and Debt Management: Prioritize sustainable welfare schemes, maintaining fiscal discipline and debt sustainability. E.g. prior analysis of cost-benefit of a scheme
- Prevent Leakages and Corruption: Improve targeting of Subsidies, eliminating inclusion-exclusion errors.
- Others: Expand Insurance Coverage as a safeguard mechanism for vulnerable sections; building political consensus and public awareness against the misuse of welfare schemes.
- Subramaniam Balaji v. Tamil Nadu (2013): States should work to open avenues for employment (welfare) instead of giving non-merit freebies.
- Economic Survey 2025-26: Deliver more durable gains in incomes and productivity than an ever-expanding set of open-ended transfers.
- E.g., Cash transfers linked to school attendance and health check-ups in Mexico's Progresa or Brazil's Bolsa Família.
Conclusion
The Freebies, which act as instruments of welfare and empowerment, often lack fiscal oversight and put strain on state finances. They lack a growth-oriented vision and prioritize short-term gains over long-term sustainable development. It is important to nudge behavior of political institutions, governments and citizens to bring change in this systemic issue.
