Freebies Model of Governance

Freebies Model of Governance

Introduction •         PM reference of the freebies as Rewadi culture.

Or

•         The Supreme Court sought responses from the Union government and the Election Commission of India (ECI) on freebies’ using public funds. (Ashwini Kumar Upadhyay vs. Union of India 2023)

Or

•         Freebies demolished Sri Lanka

Or

•         Write the Robin hood story – Robinhood economics behind freebies.

Meaning Political parties promise to offer free goods and services to the people to get the votes is known as the freebies.
ADR Survey •         42% of voters consider the distribution of cash, liquor, and freebies an essential factor behind voting for a particular candidate rather than the candidate’s plan for their welfare.
Origin 1.      Roman empire introduced freebies in 140 BC

2.      In India – Tamilnadu in 1960s

Welfare schemes vs. Freebie •         Welfare schemes are beneficiary targeted. It includes – subsidies and infrastructure. So it is productive.

•         Freebies are given to attract support of the people. They are offered by political parties that have no agenda.

Contextual difference 1.      When food is given during a pandemic – Welfare

2.      When food is given free of cost during the normal times, it is freebie.

What is offered in the freebies 1.      Common pool goods

2.      Goods of individual use 

Examples:

1.      Electricity

2.      Food and water

3.      Monthly allowance to unemployed

4.      Gadgets like TV, laptops, smartphones etc.

5.      Public transportation

6.      Farm loan waivers

7.      Medical and health

8.      Direct Cash Transfers.

9.      Scooters | Bicycles

10.   Dhotis | Sarees

11.   Mixers | Grinders

12.   Gold | Silver

13.   Cows | Goats | Rams |Buffaloes

Problems with the freebie culture: 1.      People will not have incentive to be careful with the scarce resources.

2.      Undermines the credit culture

3.      Distort the prices through cross subsidization.

4.      Erode incentives for private investment

5.      Disincentivize work at the current wage rate.

6.      Labour force participation decreases.

7.      These offers are equal to an electoral bribe under Section 123 of the RPA Act.

Types of electoral promises:

 

a.      Pre – poll promises: They are made by the ruling party as well as Opposition party

b.     Manifesto freebies: Promises made through manifestos after announcing the elections

c.      Government freebies : Implemented after the formation of government

Limitations 1.      The government cannot announce new schemes after the declaration of poll dates because of the model code of conduct.

2.      The promises made in the manifestos, however, do not attract the model code.

Freebies in Telangana 1.      Mahalaxmi Scheme:

•         Monthly financial assistance of Rs 2,500 for women

•         Free travel in RTC buses

•         Domestic gas cylinders at Rs 500 each.

2.      Rythu Bharosa:

•         Rs 15,000 crop investment assistance to all farmers

•         Rs 12,000 financial assistance for agricultural labourers

•         A bonus of Rs 500 for each quintal of paddy crop.

3.      Gruha Jyoti:

•         Free electricity up to 200 units per household.

4.      Indiramma Houses:

•         Construction of houses for homeless people, Rs 5 lakh aid and allotment of 250 square-yards plots for those who fought for Telangana statehood agitation

5.      Youth Development:

•         Rs 5 lakh financial assistance for students as education insurance cards

•         Establishment of an international school in every mandal in the state.

6.      Cheyuta:

•         Rs 4,000 pension to the eligible persons

•         Rs 10 lakh insurance under Rajiv Arogya Sree Bheema.

Advantages of freebies 1.      Makes the parties accountable.

2.      Motivation for the people to vote

3.      Creates a circular economy

4.      Reduces out of the pocket expenditure

5.      Helps to shift the purchasing power

6.      Compatible with directive principles.

7.      It did not amount to corrupt practices. (S Subramaniam Balaji vs State of Tamil Nadu case 2013)

8.      Supports the women empowerment.

9.      When government is giving incentives to the corporate sector, why not freebies to the poor.

Arguments against freebies 1.      Economic burden on the exchequer.

2.      Freebie violates article 282 i.e. centre and states can spend money only for public purpose.

3.      Public money cannot be used to create private assets.

Ex: laptops can be bought for the government schools. But they should not be given to students for personal use.

4.      Community assets may be promised but not personal assets.

5.      Promises may not be fulfilled.

6.      Political competitive biddings.

7.      Finances for freebies are not planned.

8.      Freebies are considered as bribing the voters.

9.      Irresponsible expenditure

10.   Violates the free and fair elections.

11.   Undermines credit culture Ex: loan waiver

12.   Development schemes sets back.

Way forward: 1.      Better economic policies required.

2.      Financial models require before promising any freebies.

3.      Promise community assets but personal assets.

4.      Demand driven freebies may be implemented.

5.      Rationalising the subsidies.

6.      The subsidies in basic necessities in the community assets may be offered.

Example:

Free education

Free meals at schools

Free books

7.      Focus on the promises like –

a.      Creating more employment

b.      Improving the ease of doing business.

8.      Focus more on public infrastructure.

9.      Common pool goods and services may be promised –

Example:

a.      Rule of law

b.      Equal pay for equal work

c.      Clean water

d.      Equal quality education

e.      Quality healthcare

f.       Speedy justice

g.      Free legal aid

h.      Citizen charter

i.       Judicial charter

j.       Efficient police system

k.      Effective Civil Service system

When taxpayers feel their money is spent in the right direction they are happy and pay more taxes..

Conclusion There is a need for striking a balance between freebies and development.
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