Issues related to Economic growth

Thin line between freebies and public welfare

Note4Students

From UPSC perspective, the following things are important :

Prelims level : NA

Mains level : Social security,Populist measures.

Context

  • ‘Revdi Culture’ (sweet) or Govt’s Basic Responsibility? What Prioritising Welfare Is Really About
  • While hearing a petition demanding the de-recognition of political parties that promise “irrational freebies” to voters, the Supreme Court recently drew attention to the substantial fiscal cost of freebies.

What are freebies?

  • A freebie is any public policy intervention that will have a long-term impact on production as well as productivity.
  • Any public policy intervention that doesn’t support medium-term to long-term production and productivity may be termed as a freebie.
  • The term Freebies is not new; rather it is a prevalent culture in Indian politics (in the name of socialism).
  • The political parties are always trying to outdo each other in luring the Indian voters with

Examples of freebies

  • Promise of Rs 15 lakh in our bank accounts
  • Free TV, Laptops
  • Free electricity
  • Loan waivers
  • Offering free public transport ride to all women in Delhi

Why are such policies popular among the public?

  • Failure of economic policies: The answer lies in the utter failure of our economic policies to create decent livelihood for a vast majority of Indians.
  • Quest for decent livelihood: The already low income had to be reoriented towards spending a disproportionately higher amount on education and health, from which, the state increasingly withdrew.
  • Prevailing unemployment:  Employment surveys have shown that employment growth initially slowed down from the 1990s, and then has turned negative over the past few years.
  • Increased cost of living: Real income growth of the marginal sections has actually slowed down since 1991 reforms.
  • Increased consumerism: The poor today also spend on things which appear to be luxuries; cellphones and data-packs are two such examples which are shown as signs of India’s increased affluence.

Thin line between freebie and public welfare

  • Using freebies to lure voters is not good.
  • Voter’s greediness may lead to a problem in choosing a good leader.
  • When we don’t have a good leader then democracy will be a mockery.

Negative implications

  • Never ending trail: The continuity of freebies is another major disadvantage as parties keep on coming up with lucrative offers to lure more number of votes to minimize the risk of losing in the elections.
  • Burden on exchequer: People forget that such benefits are been given at the cost of exchequer and from the tax paid.
  • Ultimate loss of poors: The politicians and middlemen wipe away the benefits and the poor have to suffer as they are deprived from their share of benefits which was to be achieved out of the money.
  • Inflationary practice: Such distribution freebie commodity largely disrupts demand-supply dynamics.
  • Lethargy in population: Freebies actually have the tendency to turn the nation’s population into: Lethargy and devoid of entrepreneurship.

Rational elements in freebies

  • Social investment: Aid to the poor is seen as a wasteful expenditure. But low interest rates for corporates to get cheap loans or the ‘sop’ of cutting corporate taxes are never criticized.
  • Socialistic policy: This attitude comes from decades of operating within the dominant discourse of market capitalism.
  • Election manifesto: Proponents of such policies would argue that poll promises are essential for voters to know what the party would do if it comes to power and have the chance to weigh options.

Why they need to stop?

  • Winning election and good governance are two different things. The role of freebies to avail good governance is definitely questionable.
  • The social, political and economic consequences of freebies are very short-lived in nature.
  • There are many freebies and subsidies schemes available in many States but we still find starvation deaths, lack of electricity, poor education and health service.
  • Hence the sorrow of the masses of India cannot be solved by freebies or by incentives.

Conclusion

  • There is nothing wrong in having a policy-led elaborate social security programme that seeks to help the poor get out of poverty.
  • But such a programme needs well thought out preparation and cannot be conjured up just before an election.

Mains question

Q. Do you think freebies are justified under the name of social security? Critically evaluate the rising freebie culture in India with its negative implications.

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