Date : 11/07/2023

Relevance: GS Paper 2 : Government policies

Key Words: PDS, NITI Aayog, Public Welfare, Fiscal policy

Context-

• Political parties often make ambitious expenditure commitments during election seasons to secure electoral success.
• One common strategy is to promise freebies to voters, with free electricity being a popular offering. While such promises may appeal to the electorate, they can pose fiscal challenges and limit funding for essential social programs.

What is Freebies:

• Reserve Bank of India's definition of freebies as "a public welfare measure provided free of charge"

Differentiating freebies from public/merit goods society

• Long-term impact on beneficiaries and society as a distinguishing factor
• Freebies may create dependency or distortions, while welfare schemes promote social justice and human development

The Advantages of Freebies:

Public Outreach and Engagement:

• Enhancing public trust and satisfaction by showcasing government responsiveness and accountability.
• Promoting transparency and democracy through opportunities for feedback and dialogue.

Economic Growth:

• Stimulating productivity and income opportunities, particularly in underdeveloped regions
• Empowering the poor and rural population through freebies like laptops, bicycles, and sewing machines

Social Welfare:

• Providing basic necessities and improving the lives of marginalized sections through freebies such as food, education, health, and electricity
• Positive impacts of freebies like food subsidies and health insurance on poverty reduction and healthcare accessibility

Income Equality:

• Reducing income inequality by redistributing wealth and resources equitably
• Empowering low-income households through freebies like loan waivers and cash transfers

Disadvantages of Freebies:

Dependency Syndrome:

• Creating a pattern of dependency and entitlement among recipients
• Reduced motivation to work or contribute, leading to decreased responsibility and accountability

Fiscal Burden:

• Straining the fiscal health and macroeconomic stability of states or countries
• Adverse impacts on public expenditure, subsidies, deficits, debts, and inflation

Resource Misallocation:

• Diverting funds from critical sectors like infrastructure, agriculture, and industry
• Negative consequences of prioritizing freebies over public goods and necessary investments

Quality Compromise:

• Decreasing incentives for innovation and improvement due to reliance on freebies
• Potential limitations and outdated technology in freebie offerings

Impact on Environment:

• Encouraging overuse and wastage of natural resources
• Negative environmental consequences of freebies such as excessive resource consumption and increased pollution levels

Recommendations for Effective Governance:

Drawing a Line Between Welfare and Freebies:

• Clarifying the distinction and implications of welfare measures versus election-oriented freebies
• Ensuring transparency in communicating funding sources and long-term sustainability of freebies

Clear Rationale and Indication of Funds:

• Requiring political parties to disclose financing details, fiscal impact, and sustainability of freebies
• Prior announcement of freebies to facilitate public scrutiny and avoid populism

Empowerment of the Election Commission of India:

• Strengthening regulatory and monitoring powers of the ECI over freebie announcements and implementation

Voter Awareness:

• Educating voters on the economic and social consequences of freebies
• Encouraging informed decision-making and demanding performance and accountability from political parties

Focus on Inclusive Development:

• Addressing root causes of poverty, inequality, and exclusion to reduce vulnerability to freebies
• Promoting economic growth and social progress through inclusive development as an alternative to freebies

Conclusion:

While freebies in election campaigns can attract voters and have short-term benefits, they also carry potential risks for fiscal health, resource allocation, and societal development. Striking a balance between welfare schemes and freebies is crucial to ensure effective governance. Implementing recommendations such as transparency in funding, empowering the Election Commission, fostering voter awareness, and focusing on inclusive development can help mitigate the negative consequences of freebies and promote sustainable and equitable governance practices.

Source The Indian Express