Public Goods Vs Freebies

Relevance: GS2 - Elections, Representation Of People Act 1951,Directive Principles of State Policy, Welfare measures,Fiscal Deficit, Cooperative federalism, Model Code of Conduct for Political Parties and Candidates, Election Commission of India

(Source: The Indian Express, 11/23/2023)

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Why in the news?

The issue of Freebies is very much in the news as elections for five states are in the process and the General election of 2024 is about to happen in the next few months.

What is freebies:

• According to the Reserve Bank of India (RBI) ‘freebies’ is a form of public welfare programme that is offered without any cost.
• Election Freebies are the offerings/distribution of irrational freebies from political parties as part of electoral promises. E.g., Free electricity, Free Water, Free Rides, Loan Waivers, Allowances, laptops etc.

Difference between freebies/non merit goods and Public Goods/Merit Goods:

• According to the Reserve Bank of India (RBI) freebies can be differentiated from public or merit goods, such as education and healthcare, as well as other state expenditures that yield broader and enduring advantages.
• Merit goods, such as free or subsidised food, education, shelter, and healthcare contribute in expediting human development and subsequently fostering national economic progress.
• Freebies do not necessarily bring tangible social benefit.eg.free distribution of electricity,loan waivers to farmers,free pilgrimages etc.

Arguments in favour of Freebies:

• Social Welfare: Freebies, often in the form of subsidies and schemes, aim to uplift the economically weaker sections of society.
• Poverty Alleviation: By providing essential goods and services at reduced or no cost, freebies can contribute to poverty alleviation.
• Inclusive Growth: Freebies can bridge the gap between the rich and the poor, fostering a more inclusive and equitable society.
• Political Support:Governments often use freebies as a tool to gain and retain political support, especially during elections.
• The focus is just on freebies provide for poor section of society, In fact government provide freebies to well off section of society in the form of land to industries at highly subsidised rate, writing off loans worth crores of rupees to industrialists, huge sums spent on beautification projects,Several tax exemptions and tax holidays.
• S.Y. Quraishi, former Chief Election Commissioner said the ‘freebie’ promises like inexpensive food and free utility items have actually done a lot to advance the democratic goal.

Negative impact of Freebies:

• Financial Burden on state exchequer: Implementing freebies can strain the financial resources of the government, leading to budgetary challenges.
• Creates culture of Dependency:Continuous reliance on freebies may create a culture of dependency, discouraging self-sustainability and economic growth.
• Corruption:The distribution of freebies involves corruption, targeted beneficiaries many times do not receive the full benefits.
• Populism Over Policy:Freebies might be seen as populist measures designed for short-term political gains rather than long-term policy solutions.
• Distort expenditure priorities:Freebies expenditure impact state revenue which can hamper government’s expenditure on infrastructure creation.

Solutions:

• Need clearcut demarcation between freebies and merit goods like Health,education,PDS etc.
• More powers to Election Commission of India:Powers to penalise and deregister political parties and members,power to enforce Model Code of Conduct.
• Need to focus on data driven policy
• Political parties should adopt ethical guidelines that discourage the distribution of freebies and focus on promoting substantive policies and development agendas.
• Awareness generation programmes:It will help voters to make informed choices based on the candidates' qualifications, policies, and track records, rather than being influenced by freebies.
• The Finance Commision can consider freebies expenses,debt burden of states while distribution of resources.

Judgements associated with freebies:

• Subramaniam Balaji Vs State of Tamil Nadu (2013):SC upheld the distribution of TVs or consumer goods because programmes that helped women, farmers, and the poor were in line with the Directive Principles.But it also directed ECI to frame guidelines to check freebies in consultation with political parties.

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FAQs

Question: What is the meaning of freebies?

Question:What are the different forms of freebies?

MCQs

Question: Consider the following statements: (UPSC 2017)

1. The Election Commission of India is a five-member body.
2. Union Ministry of Home Affairs decides the election schedule for the conduct of both general elections and by-elections.
3. Election Commission resolves the disputes relating to splits/mergers of recognized political parties.

Which of the statements given above is/are correct?

1. 1 and 2 only
2. 2 only
3. 2 and 3 only
4. 3 only

Answer: (d) See the Explanation