Our problem is fiscal mismanagement, not freebies

While there are real reasons for such apprehensions, there is no clarity on what constitutes a ‘freebie’. Governments provide various types of goods and services to the citizens free of cost. Including free textbooks, uniforms, food etc. In many cases even services like free health and education. The way the debate is currently framed, freebies appear to be any goods and services offered by the government to citizens for free. But many of these may be necessary and necessary for improving the lives of people and for the overall well being of the society.

Free uniforms, textbooks and classroom stationery items are essential to increase the school enrollment ratio in the country, so that an educated and skilled workforce can make a meaningful contribution to economic development. There is also the case of subsidized food grains under the National Food Security Act (NFSA) as part of the country’s public distribution system, the mid-day meal scheme and anganwadi services. His contribution in improving the nutritional status of children and adults is widely recognized. Moreover, it was the NFSA that came to the rescue during the COVID pandemic, when free food grains were distributed to the beneficiaries which proved to be an essential lifeline for a large number of families.

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While many want to make a distinction that considers nutrition, health and education both essential and part of the state’s constitutional obligations, there are objections to various other items provided by the state and central governments. Bicycles have been provided free of cost to girl students in many states. LPG stove and gas cylinder are provided free of cost under the Ujjwala scheme. Some state governments have also provided laptops and smartphones.

None of these are extravagant by any stretch of the imagination. The free distribution of LPG has certainly helped women with the arduous labor of cooking, but has also helped prevent environmental pollution and prevent diseases. Similarly, smartphones and laptops have brought relief to many students, who otherwise would have been deprived of basic education during the last two years of online classes. Similarly, free vaccines provided by the state in the normal course of life and especially during pandemics have prevented lakhs of deaths.

But even where cash is provided in place of goods and services, such as cash transfers to farmers or social pensions to vulnerable sections of the population, these provide relief to disadvantaged and affected groups. All these count as essential functions of the redistribution policies of the state.

Clearly, there is a thin line between what may be called a ‘freebie’ and what may be considered an essential constitutional obligation of the state. The problem is how this debate is framed, often done in such a way that the club seeks to club everything the state provides to citizens for free. Each of these should be assessed in the context of the role they play in improving the lives of citizens and their impact on the economy. Some of these are essential social safety nets, while many others are necessary incentives for better social and economic outcomes.

However, this debate completely ignores the financial consequences of large bailouts given to the corporate sector. India’s tax cuts for corporations in 2019 did not contribute to any increase in investment, but did help contribute to growth in private sector profits. The write-off of large corporate debts at the expense of the public exchequer is justified on financial grounds, but is hardly treated as a freebie.

The real issue is not the distribution of these goods and services to Indian citizens, but whether they are financially sustainable. It is true that in many cases, it has contributed to fiscal stress in the states. However, blaming such expenditure on the provision of essential services is unlikely to solve the financial problem. Part of the blame should also lie on the government’s inability to mobilize enough resources to enable these. Instances of tax exemptions, bailouts, loan waivers and crony capitalism, where public resources are given to the private corporate sector, are equally responsible for the deterioration in the financial position of the states and the Centre.

It is important that we take a fair and balanced view of free gifts. The real debate should be about the performance of state and central governments on fiscal management. The current debate on freebies is just an excuse to divert our attention from the serious issue of fiscal mismanagement by successive central governments along with the states. This would require addressing not only the issue of government spending priorities, but also the challenge of resource mobilization, which rarely goes unnoticed, unfortunately, let alone public debate.

Himanshu is Associate Professor at Jawaharlal Nehru University and Visiting Fellow at Center de Sciences Humanes, New Delhi

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