Freebies And The Indian Welfare Debate

The growing reliance on free welfare promises in Indian politics has sparked a debate over whether such measures constitute genuine social support or fiscally irresponsible populism.

Understanding Freebies In Public Policy

• Meaning and Scope: Freebies denote welfare benefits supplied without charge by governments or pledged by political parties, primarily with the objective of attracting electoral support.
• Key Features: These measures are typically populist in nature and often distort public spending priorities. They divert resources away from long-term developmental investments and are widely viewed as financially unsustainable. Over time, they may also weaken incentives for self-reliance and productivity.

Common Forms Of Freebies

• Utility Subsidies: Provision of free or highly subsidised electricity, limited free power units, and complimentary water connections to households and farmers.
• Distribution of Consumer Goods: Free supply of items such as televisions, laptops, mixer-grinders and similar household appliances.
• Food and Essential Items: Additional free food grains beyond Public Distribution System entitlements and monthly ration kits.
• Loan Waivers: Cancellation of agricultural or community loans announced by state governments.
• Cash Transfers: Direct monetary assistance to specific categories such as women, unemployed youth, or vulnerable households.

Legal And Institutional Position

Supreme Court’s View:

In the S. Subramaniam Balaji judgment (2013), the Court held that the provision of freebies falls within the domain of legislative policy and lies outside routine judicial scrutiny. It also recognised that certain welfare measures align with the Directive Principles of State Policy.

In 2022, the Court proposed an expert committee comprising representatives from NITI Aayog, the Finance Commission, the Election Commission, the Reserve Bank of India, and political parties to examine the impact of freebies and suggest safeguards, though the body was not constituted.

While hearing a public interest litigation in 2025, the Court criticised pre-election freebies, cautioning that free rations and cash doles discourage work and foster a “class of parasites.”

Election Commission of India:

The Commission’s Model Code of Conduct and manifesto guidelines state that election promises are not treated as corrupt practices under the Representation of the People Act, 1951. However, parties are advised to avoid pledges that may compromise electoral fairness or exert undue influence.

Reserve Bank of India:

The RBI distinguishes between merit-based welfare spending and freebies, warning that competitive announcements of loan waivers, free electricity and cash transfers crowd out infrastructure expenditure and impose severe stress on state finances.

Concerns Surrounding Freebies

• Escalating Fiscal Stress: The Economic Survey 2025–26 estimates that unconditional cash transfers and populist freebie schemes may cost about ₹1.7 lakh crore in FY26. The combined gross fiscal deficit of states has increased from 2.6 percent of GDP in FY22 to 3.2 percent in FY25, while outstanding liabilities stand near 28.1 percent of GDP.
• Erosion of Capital Expenditure: Rising freebie spending often comes at the expense of infrastructure and capital investment, which are essential for sustained growth and development.
• Democratic and Electoral Distortions: Pre-election promises of irrational freebies influence voter behaviour and undermine the level playing field, resembling unethical inducements.
• Dependency and Reduced Work Incentives: For many beneficiaries, cash transfers form a significant share of monthly income, raising fears of long-term dependency and discouragement of entrepreneurship.
• Limited Developmental Impact: Although freebies can improve consumption and short-term stability, they do not reliably enhance nutrition, education outcomes, or durable poverty reduction without strong public services and employment creation.

Potential Benefits Of Freebies

• Foundation for Major Welfare Programmes: Schemes such as the Mid-Day Meal Programme and earlier low-cost rice initiatives laid the groundwork for today’s National Food Security architecture.
• Support to Farmers: State initiatives like Rythu Bandhu and KALIA influenced the design of PM-KISAN.
• Education Promotion: Distribution of bicycles to schoolgirls in Bihar and West Bengal has reduced dropouts and improved attendance.
• Women Empowerment: Free bus passes and sewing machines in states such as Tamil Nadu and Bihar enhance mobility and livelihood opportunities.
• Food Security: PDS and Mid-Day Meal schemes ensure minimum nutritional support.
• Economic Stimulus: Cash transfers stimulate local demand and benefit small businesses.
• Democratic Engagement: Visible welfare delivery can strengthen public trust and political participation.

Arguments In Favour Of Freebies

• Welfare Orientation: In a country marked by poverty and inequality, subsidies and transfers provide essential support and contribute to inclusive growth.
• Constitutional Basis: Articles 38 and 39 of the Directive Principles of State Policy mandate social justice, equitable distribution of resources, and reduction of inequalities.
• Protection of Vulnerable Groups: Free food, healthcare, education and targeted transfers help households cope with economic distress.
• Human Capital Development: Subsidies in health, nutrition and education improve long-term productivity.
• Crisis-Time Income Support: Direct transfers act as safety nets during inflationary shocks, pandemics or unemployment.

Arguments Against Freebies

• Heavy Fiscal Burden: Most states face revenue deficits, and excessive free schemes restrict spending on infrastructure, hospitals and schools.
• Poor Targeting: Universal subsidies often fail to distinguish between affluent households and those genuinely in need.
• Unplanned Announcements: Sudden, off-budget commitments generate financial uncertainty and disrupt systems such as electricity tariff setting.
• Opportunity Cost: Public funds used for universal freebies could otherwise support roads, schools, healthcare and job creation.
• Dependency Risks: Continuous distribution of free goods and cash may weaken work culture and productive engagement.
• Intergenerational Consequences: Rising public debt shifts the burden to future generations.

Way Forward

• Budgetary Transparency: All subsidies should be incorporated into planned expenditure and disclosed clearly in budgets.
• Clear Classification: Differentiate essential welfare from populist freebies using objective criteria such as social utility, long-term impact and fiscal sustainability.
• Targeted Delivery: Focus benefits on genuinely vulnerable groups and avoid universal subsidies for the affluent.
• FRBM Strengthening: Reinforce fiscal rules and mandate sunset clauses and periodic reviews for subsidy schemes.
• Outcome-Based Transfers: Link benefits to education, health or skill development outcomes.
• Voter Awareness: Promote public understanding of the opportunity cost of excessive freebies.
• Legal Safeguards: Examine amendments to the Representation of the People Act, 1951 to curb undue influence and require disclosure of the fiscal viability of manifesto promises.