Political parties don’t want freebies to go. It is their much-cherished tool to harness votes. And they know it works like a charm
In the just concluded assembly elections in Karnataka, the grand old party (GOP) Congress had promised five guarantees viz. Gruha Jyoti, Gruha Lakshmi, Sakhi programme, Yuva Nidhi, and Anna Bhagyain in its manifesto.
Having got a decisive mandate to form the government, Congress pledged to approve all the five guarantees in the very first meeting of the Cabinet. The big question is: is it worth spending so much of taxpayers money?
The guarantees are intended to be a welfare scheme. Under it, the government should ensure that (i) the assistance goes to a person who is desperately in need (one who is poor or very poor); (ii) it should be given for a ‘limited period’ after which she should stand on her own and (iii) the scheme should be funded in a manner such that it doesn’t destabilize the budgetary position.
Under Gruha Jyoti, the GOP promises to provide 200 units of free electricity a month for every single household (HH) in the state. The very idea is abhorrent. It presumes that every HH is so poor that it can’t afford to pay even Rs 1000 a month being the cost of 200 units of electricity @ Rs 5 per unit.
Further, in the absence of any mention of ‘for how long’, it is assumed that free supply will continue for the full term of this government i.e. 5 years. The scheme will impose a ‘needless’ burden on the state exchequer for that long.
It will also strain the finances of power distribution companies which will have to supply zero tariff power to all HHs on behalf of the state government and won’t get paid by the latter in time or paid less or not paid at all as is the case in many states who are already supplying power free or at concessional tariff.
Under Gruha Lakshmi, Every Woman head of a house will get two thousand rupees a month. This again is bizarre! Going by the manifesto, even a billionaire woman is eligible. Distributing money in this manner is a sheer waste of scarce resources. The GOP says “We are keeping the money in the hands of women to ensure that they’re in control and in charge of their own life”.
The idea of empowering the woman is fine. But, we must not forget the context. For schemes like PM Awas Yojna where houses are built for the poor and the ownership is vested with the woman head, this makes eminent sense. But, to give money to all and sundry and then trumpet about women’s empowerment looks ridiculous. The Sakhi programme under which free bus tickets for all women to travel in Karnataka are provided too suffers from the same absurdity.
Under Yuva Nidhi, the government will provide support to the Youth of Karnataka for two years by paying Rs 3,000 to unemployed graduates and Rs 1,500 to unemployed diploma holders every month. Prima facie, this may be in sync with the principle of extending support to a person who needs it. But, it can’t be divorced from the economic status of the family she belongs to. If an unemployed youth belongs to a rich family which can take care of her during the difficult period i.e. when she remains without a job, there is no need for state support.
State support should be given only if the unemployed youth is from a poor HH. That apart, while choosing the beneficiary, the government must ensure that she is not self-employed. The manifesto doesn’t talk of any of these riders. Finally, under Anna Bhagyain, the GOP has promised to give 10 kgs of rice per person per month to BPL families. Such families are already getting 7 kg of food per person per month under the National Food Security Act or NFSA (2013).
Redeeming these guarantees will cost around Rs 62,000 crore a year which is even higher than the States’ fiscal deficit or FD (excess of expenditure over receipts) of Rs 60,500 crore during 2022-23. Unless there is a cut in expenditure under some head or an increase in receipt for an equivalent amount, the FD would be Rs 122,500 crore. Expressed as a share of the state gross domestic product (SGDP) this would go beyond 5 percent against the 3 percent ceiling fixed under Fiscal Responsibility and Budget Management (FRBM) Act.
The guarantees don’t follow the cardinal principles of a welfare scheme. These are neither directed to the needy nor have any terminal date and will have a destabilizing effect on the budget. These benefits distributed by Congress using public money for garnering votes are known in common parlance as ‘freebies’. The menace has gripped most of the political parties that use freebies as the key to winning elections.
Emboldened by its victory in Karnataka, the GOP will use freebies even more brazenly in state elections slated towards the end of 2023 as also during general elections in 2024. This will force others including the ruling BJP to offer similar or even more tempting allurements (already, BJP top brass has started galvanizing its thought process in that direction). This rat race will have devastating implications for the finances of both states and the Centre.
Is there any way this menace could be reined in?
To get an answer, let us look at a judgment of the Supreme Court (SC) in S Subramaniam Balaji vs the Government of Tamil Nadu & Ors delivered way back in July 2013. It has been observed that the distribution of freebies of any kind influences all people. “It shakes the root of free and fair elections to a large degree.” This would have led any logical person to believe that the SC would give a strict direction to stem the rot. But, what followed was a lame-duck order.
The SC had held that promises in the election manifesto cannot be construed as “corrupt practice” under the Representation of People Act (RPA), or any other prevailing law and, hence, distribution of freebies can’t be stopped when the ruling party uses public funds for this purpose through the passage of Appropriation Acts in the state Assembly.
In the same order, it directed the Election Commission of India (ECI) “to frame guidelines that could govern the contents of the election manifesto of all the recognized political parties as when it had acted while framing guidelines for general conduct of the candidates, meetings, processions, polling day, etc”. Further “this can also be included in the model code of conduct – under a separate head for guidelines for election manifesto – for guidance of political parties and candidates”.
The ECI never came out with any such guidelines.
After a long hiatus, hearing a PIL seeking directions against ‘freebies’ on January 25, 2022, the SC observed “this is no doubt a serious issue. Budget for freebies is going above the regular Budget. This disturbs the level playing field”. Its concern this time was more intense than it was in 2013. But, what about the action?
On August 3, 2022, the SC asked the parliamentarians to enact a law on curbing freebies but only after a committee set up by it examines all pros and cons. But, the majority of political parties don’t want freebies to go away. It seems, India will have to live with this menace eternally.
(The writer is a policy analyst)
https://www.dailypioneer.com/2023/columnists/who-will-end-the-free-run-of-freebies-.html
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