Can you guess what is common between a television, cycle, scooter, laptop, fan, mixer and grinder? If you lived in Tamil Nadu between 2010-2021 you would have been a recipient of these items generously provided by the ruling Dravidian parties. The cost of freebies was so magnanimous that it led to a fiscal deficit of Rs 15,580 crores in the state budget of Tamil Nadu in 2016. Recently, the Supreme Court listed a hearing of a group of petitioners who asked the court to ban irrational freebies. It is widely argued that providing such freebies bleeds the national economy and aggravates the burden on the taxpayer. However, viewing the issue of freebies from a financial perspective does not do justice to the discussion.
It should be remembered that freebies are great investments in human capital. The provision of commodities such as laptops, cycles and scooters enable BPL (Below Poverty Line) families to rise above the poverty line. For example, schemes such as providing 2GB of mobile data free of cost to students during the pandemic helped disadvantaged students attend online classes. Providing free laptops enabled youngsters to acquire various technical skills that will make them employable. Providing free cycles and scooters to girls and women respectively enables them to commute to schools, colleges and workplaces without depending on the men of the house or elders. It bolsters values such as equality and fraternity in society. At this juncture, we must differentiate between a freebie and a welfare scheme for our understanding.
A welfare scheme caters to the specific needs of a section of society. Schemes such as Ayushman Bharat, Pradhan Mantri Grameen Kaushal Yojana and Pradhan Mantri Awas Yojana are welfare schemes that intend to provide basic amenities such as quality healthcare, skill training and shelter to the backward communities. Welfare schemes are the need of the hour as they uplift these backward communities out of poverty. On the other hand, freebies are promises made and often delivered by political parties to retain or gain the support of a particular community. Hence, more often than not freebies come under the scrutiny of economists and policy thinkers across the country as the burden of uplifting the downtrodden falls on the loyal taxpayer. This could have been avoided if governments since independence had made consistent efforts in building quality educational facilities across the country. The era of populism, since the 1970s, overshadowed the principles of equitable development and fiscal discipline. Sound public expenditure on infrastructure, education and healthcare would have provided a strong base for building a formidable nation. India should either follow the footsteps of Canada where universal healthcare is provided to all its citizens funded through high tax rates or UAE where income tax is not collected but quality healthcare is provided at higher rates. On the other hand, the fiscal policy of both the state and central governments change according to the political promises of the ruling party. This leaves the taxpayers ill-prepared for the economic shocks they are bound to receive.
As a welfare state, it is important for India to constantly gauge the needs of the people and accordingly formulate policies that not only solve the problems of the present but also lay the foundation for a bright future. In the last decade, India has done well in solving the issues of the present. Around 241 million people have been lifted from poverty because of the various welfare schemes implemented by both the state and central governments. While promising freebies cannot be simply abandoned by political parties as it requires time to condition the thinking of the masses, it is important that adequate investments be made in building infrastructural, educational and healthcare facilities. Both state and central governments should strategically juggle populist schemes and reformist measures to make India First in development.