The discourse surrounding freebies in India encompasses a wide range of government-provided benefits, from subsidized food rations and discounted gas cylinders to free bus rides for women. While often framed as essential welfare measures, these policies generate significant debate regarding their economic sustainability and long-term societal impact. The provided source material offers a detailed look into the scale of these distributions, the political motivations behind them, and the concerns raised by economists and social commentators.
Defining the Scope of Freebies
The term "freebie" is frequently used to describe a variety of government benefits, though distinctions are often drawn between different types of subsidies. According to the 15th Finance Commission Chairman, NK Singh, it is imperative to distinguish between standard freebies and "merit goods subsidies." The latter includes subsidies in the education and health sectors, such as the mid-day meal program, which are viewed as investments in human capital rather than mere fiscal giveaways.
Despite this distinction, the scope of what is considered a freebie is broad. Rawat notes that the continuation of free ration for 80 crore Indians for five years qualifies as a freebie, as does a free bus ride for every woman regardless of income level, or a ₹500 gas cylinder for families above the poverty line. Similarly, the Ladli Behna benefits for 1.32 crore women in Madhya Pradesh fall into this category. These examples illustrate how freebies permeate various aspects of Indian life, targeting both the poor and the middle class.
The Political Economy of Freebies
Political parties in India often utilize freebies as a tool to capture vote banks. The Supreme Court of India is currently hearing petitions challenging pre-election promises of freebies and government policies that distribute benefits to secure electoral support. Prime Minister Narendra Modi has previously criticized this culture, referring to it as "revdi" (a popular sweet), implying that such offerings are tempting but ultimately detrimental.
The Election Commission’s ability to regulate these promises is limited, as announcements are often made when the model code of conduct is not in force. Once a freebie is implemented, it becomes politically risky for any subsequent government to withdraw it due to the fear of a voter backlash. This creates a cycle where legacy subsidies become entrenched, regardless of their economic efficacy. The Economic Times source suggests that the actual impact of freebies on the Indian economy is limited because many promises remain unfulfilled, yet the expectation of such benefits persists.
Economic Implications and Fiscal Health
The financial burden of these giveaways is substantial. In the fiscal year 2014-15, subsidies accounted for INR 2,51,397 Crores out of a total Non-Plan Expenditure of INR 12,19,892 Crores, representing roughly 21% of the spending. NK Singh warns that the freebie culture is a "passport to fiscal disaster" and not a road to prosperity. He argues that freebies are not a substitute for economic growth and will prove expensive in the long run.
There is also a connection between the reliance on freebies and the issue of tax evasion. India reportedly loses INR 14 lakh crore annually to tax evasion. The author of "The Black Economy in India," Arun Kumar, suggests that recovering this amount could transform the country into an economic superpower. However, the prevailing mindset is criticized for craving free power, free water, and various subsidies while resisting the obligation to pay taxes or full market prices for services.
Social and Behavioral Impacts
The cultural appetite for freebies extends beyond government policy into the private sector and individual behavior. A LinkedIn article describes a "rotten ideology of freebies" affecting the services industry, where Indian clients often expect 200% more work than contractually agreed. This mentality is not limited to the general population; the article recounts a story of a wealthy, famous Indian painter who requested a discount for cardiac surgery from a top surgeon.
During the COVID-19 pandemic, the demand for freebies and fiscal packages increased as restrictions froze economic activity. Critics argued that this fostered lethargy and discouraged people from returning to work or engaging in low-investment businesses like vegetable vending. The concern is that a reliance on government largess shrinks the output of the economy and pushes the poor further to the margins, allowing foreign firms to control supply chains.
The Paradox of Poverty Reduction
A significant paradox exists in India’s approach to poverty reduction. Rather than increasing income levels to make people less poor, the strategy often focuses on helping them spend less through subsidies. While government schemes have shown progress in the Multidimensional Poverty Index (MPI), particularly in areas heavily reliant on subsidies, this progress is fragile. Subsidies are politically difficult to withdraw and impose an increasing burden on government finances each year.
Improvements made through schemes that do not entail continued subsidies, such as the construction of toilets or provision of gas connections, risk being undone once the subsidies run out. Consequently, the government’s attempt to reduce expenditure on essentials helps the poor stay afloat but fails to pull them out of poverty in a sustainable way.
Corporate Freebies and Government Influence
The dynamic of distributing "freebies" extends to corporate interactions with the government, as illustrated by Microsoft’s activities in India. In 2002, Bill Gates was reported to be handing out numerous freebies to India's federal and state governments, which reportedly started to annoy government officials when open-source software was mentioned.
Microsoft provided free .NET software to the Karnataka state government for e-government systems and announced a project to provide broadband for state schools. This largesse was described as "donateware," a strategy used to build Microsoft's presence and influence within government sectors. Microsoft suggested that their prices could be "dramatically lower" for socially relevant projects, providing a moral underpinning for their donations. However, critics like Richard Stallman compared free Windows to free cigarettes, arguing that it created dependency rather than value.
Conclusion
The landscape of freebies in India is complex, ranging from essential welfare subsidies to politically motivated giveaways and corporate donations. While these measures provide immediate relief and are often credited with progress in poverty reduction indices, they pose significant long-term risks to fiscal stability and economic growth. The cultural expectation of free goods and services, reinforced by political promises and corporate strategies, creates a challenging environment for sustainable economic development. Addressing the fiscal burden and shifting focus toward income generation rather than expenditure reduction remains a critical challenge for the Indian economy.