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Delhi, 10 August 2022
Freebies In Elections
DENT ECONOMY, EQUAL CHANCE
By Dhurjati Mukherjee
Freebies have for quite some years been
playing a prominent role in electoral politics in India. Despite knowing the
fact that freebies will put additional burden on the exchequer, political
parties have been competing with each other in the run-up to elections,
announcing a string of freebies to attract voters. Interestingly, Prime Minister
Narendra Modi recently cautioned people against what he called as ‘revadi
culture’ of offering freebies for garnering votes, and called it ‘very
dangerous’ for the nation’s development. Dealing with the issue, the Supreme
Court of India recommended that stakeholders set up a mechanism for suggesting
measures to the government.
In recent years, the spotlight is back on how
“irrational freebies”, often doled out ahead of polls, can be reined in. It may
be mentioned here that the 15th Finance Commission suggested the
establishment of a neutral body in the form of Fiscal Council to look at the
records of both the Centre and the States, although it was proposed to have
only an advisory role. Power is possibly the most grotesque example of
freebies, of flawed welfare economics neither guaranteeing welfare.
Many States are pursuing the freebie
culture. Ideally, governments should use borrowed money to invest
in both physical and social infrastructure which will generate higher
growth, and thereby higher revenues in the future so that the
debt pays for itself. On the other hand, if governments spend the loan
money on populist giveaways that generate no additional
revenue, the growing debt burden will eventually implode and end in
tears. Concerned by an increasing number of States that are embarking on
this financially ruinous path, senior bureaucrats reportedly flagged
the issue that ‘some States might go down the Sri Lankan way’.
Dealing with a Public Interest Litigation
(PIL) on the issue, the Supreme Court, suggested constitution of an experts
group with representatives from Niti Aayog, Finance Commission, Reserve Bank of
India and political parties to study the impact of freebies on the tax payers
and the economy as a whole and recommend measures to regulate it. It is
significant to note that during the hearing, the apex court did not leave the
matter entirely to Parliament but referred to the inaction of the Election
Commission, which, it felt, was relying on the 2013 judgment that stated that Nirvachan
Sadan can only formulate a model code of conduct at the time of elections.
The PIL, which was filed ahead of the recent Assembly
elections in five States, had sought a complete ban on populist measures to
gain undue political favour from voters as these violate the Constitution, and
the Election Commission should take suitable deterrent measures. The plea
wanted the court to declare that the promise of freebies from public funds
before polls unduly influences the
voters, disturbs the level playing field and vitiates the purity of the poll
process. “This unethical practice is just like giving bribes to the electorate
at the cost of the exchequer to stay in power and must be avoided to preserve
democratic principles and practices,” it read.
Delving into the problem, one may perhaps find
that the culture of freebies was started by the late Tamil Nadu Chief Minister,
J. Jayalalitha, promising free saris, pressure cookers, washing machines,
television sets etc, and this was quickly followed by other political parties.
In recent times, the AAP swept the Delhi Assembly elections by promising free
electricity, water to the voters. Lately during the 2021 Kerala Assembly
elections, freebies such as subsidised rice and food kits were promised by the
ruling Left Democratic Front.
Before Punjab Assembly elections, the AAP
promised free electricity for 300 units to the electorate and Rs 1000 per month
for every woman, aged 18 years and above, if voted to power. It did have a
positive effect for the party. However, this speaks volumes about the impact freebies
have. And while, as is exemplified in the case of Punjab, such freebies culture
can not only spell doom for the economy but is dangerous in case of a sensitive
border State, AAP supremo Kejriwal, justifies it saying that ‘giving away
crores of rupees from the government exchequer to friends will lead to an
economic crisis, and not providing free facilities to people.’
A recent State Bank of India Research report
observed that unsustainable farm loan waivers might be a potential recipe for
fiscal disaster. States including Rajasthan, Chhattisgarh, Andhra Pradesh,
Bihar, Jharkhand and Bengal have committed to spend 5 to 19 per cent of their
revenue receipts on unsustainable schemes. In terms of percentage of State
owned tax revenue, this exceeds 50 per cent for some of the States.
Obviously, there is a need to rationalise
their spending priorities, though some of the welfare schemes, if they reach
the target beneficiaries may have a positive effect. The SBI report of Dr
Soumya Kanti Ghosh noted that for as many as 18 States it studied, the average
fiscal deficit (as percentage of GSDP) has been revised upwards by 50 bps to 4
per cent for financial year 2022 with 6 States slithering towards the red line,
reporting fiscal deficit more than 4 per cent of GSDP.
It is a well-known fact that the financial
condition of many a State is indeed precarious. In the last fiscal, as many as
seven States exceeded their budgeted target while 11 others have been able to
keep their fiscal deficit equal or lower than their budgeted numbers. It may be
noted that the Comptroller and Auditor General of India (CAG) pointed out
that in respect of some States “if extra-budgetary borrowings are taken into
account, the government's liabilities are way above what is acknowledged in the
official books”.
But this situation cannot continue for long,
as a result of which freebies before elections are grossly unjustified. Sensing
the problem, top bureaucrats warned against the deleterious effects of
announcements of freebies by various State governments, mostly before
elections. They wanted the Election Commission to stop the unsustainable
freebies in the greater interest of the economic health of the States.
A question may arise that these freebies are
mostly extended to people living in rural and backward areas and thus benefit
the poor and the economically weaker sections (EWS). This argument is not quite
justified as irrational freebies eat away the development budget of the
indebted States that do not have sufficient funds for welfare schemes as also
for undertaking development work in rural and backward areas. It is thus quite
obvious that the more States spend on freebies, the less they have
for spending on physical infrastructure such as, for power and roads,
and on social infrastructure such as education and health, which
can potentially improve growth and generate jobs.
The present step by the apex court should
have come much earlier, as the recommendations of the expert committee may help
regulate freebies. Moreover, the political parties should not be allowed to
announce freebies before elections at their will without the prior consent of
the Election Commission as also getting such decisions passed in their
respective State Assemblies. Development and a level playing field should not become
a victim to freebies. ---INFA
(Copyright, India News & Feature Alliance)
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