It’s the crucial semi-finals – coming!! It’s no ordinary election. It’s not one but a whole lot of five States which will go to the hustings early next week. Just why I called it a bout of ‘semis’ is that 16% of total electors country-wide, 10% of receipts earned by all States and Territories put together and 14% of their Gross Fiscal Deficits sit in the books of these five States! Secondly, the side which gets an edge here, gets an edge in the finals, the Parliamentary Polls next year, the finals! I thought I’ll take a look at the promises and the freebies on offer! And it’s now a contest of sorts, which promises better freebies? In a hearing in a related case the Supreme Court had observed in August 2013, “On this issue, I can say all political parties are on one side, everybody wants freebies.” I propose therefore to discuss four sides of this evil, a) what exactly I meant as ‘Freebies’, (the ‘Revdi-Culture’ famously) and how is it different from public welfare? b) Examples of freebies already on offer in the current race for freebies by different political parties, irrespective of proclaimed policies; c) What’s wrong then? and of course d) My prescription in all of this. My Take: a) In this context, a freebie is a continuing non-merit benefit, given free or cheap to a targeted segment of voters, luring them to vote you term-after-term, irrespective of your overall achievements. And surprisingly, it works like magic! There have been State Governments with dismal performance for decades, for 34 long years, and the freebie? Land ‘Reforms’ and Titles-to-the-Tiller. I wouldn’t call it a merit-benefit without a separate debate, but the fact is the poor tiller is so happy with his title, he’s scared to vote anybody else in subsequent polls, lest the freshers revoke his title, and it’s never better known how dear the title to the smallest of his land is, to a tiller! You keep winning term after term, with dismal performance. And as I said, the moment his land title was touched (for trying out large industries with huge employment and ancillary potentials), the State Government was voted out altogether. Public Welfare Grants on the other hand, target Economically Weaker Sections as a whole, not a particular segment of the vote bank. In other words, welfare expenditures are planned benefits, justifiably aimed to cover an entire stratum of the population, designed to yield economic results from demand. The MNREGA or the National Food Security, The Pradhan Mantri Suraksha Yojana 2015 or the Mudra Yojana 2015, could be construed as good examples of merit-subsidies in my view and they entail a lot of down-stream benefits to the economy. But if you give away a scooter or a TV Set or a bicycle or money to girls on their wedding, what down-stream benefits are really achieved? Of course other than burgeoning non-productive expenditure distracting even unintentionally, electors from expecting more permanent benefits from over-all development of the society like, public health and nutrition (look at our Hunger Index Ranking), environment, quality education, particularly in Mathematics and Numeracy. I have heard vague arguments such as these freebies follow nobly from Article 282, which talks of ‘Grants for Public Purposes’. I may add here, that 28% of the receipts earned by all States and Union Territories together go to fund non-development expenditure and you can add another 12% for interest payments. So where do these expensive freebies fund from? The Election Commission, recently reportedly stated “Voters should know the picture which emerges on the basis of financial fundamentals,” adding… “there has to be a balance on present versus mortgaging future generations”. b) Let’s look at the on-ground picture of the forthcoming State Polls (and I can say with ease, they are no different from past ones): One of the States, claims that the Rs 200 bonanza on LPG Cylinders was a ‘Raakhi Gift’ to ladies. (No prizes for guessing, in this State, 2.6 of the 5.4 crore voters are women!) There’s a promise for Rs 3,600 crores for a ‘Laadli Behna Scheme’, Rs 1,000 crore for a Laadli Laxmi. Two schemes –Rs 1,100 crores for scooters to girl-toppers and Rs 5,000 crore for plots of land for the land-less. In all, these bounties reportedly add up to somewhat of Rs 11,000 crores of the freebies. I may add now, of its total receipts this State pays out 11% on interest costs and nurses a Gross Fiscal Deficit of 27%! Not to be caught napping, its rival in the neighbouring State promises free mobile-phones cheap LPG and free electricity. A tag totally, of Rs 12,700 crore punched on the State exchequer, I must add, this State already pays out 12% of its receipts as interest costs and carries a deficit of 27% of its total receipts! (These numbers are from the RBI’s Annual State Finances 2022-23 Statement). c) But as I said, these are just a few examples to explain the reasons for general concern for the India of Tomorrow, as a Member of the NITI Aayog reportedly exclaimed recently, if we do not cease the “culture of freebies” ..we may well be in for an economic crisis! The RBI in its report (citing Sri Lanka’s experience), expressed concerns of financial distress on, rampantly providing non-merit freebies and populistly cutting down State taxes. d) My prescriptions: It’s the Election Commission. They are the masters of elections in our country. In its judgements in the SS Balaji vs Government of Tamil Nadu, the Top Court ten years ago, empowered the Election Commission to ‘restrict’ a party, if its manifesto fails to provide a proper nexus between the freebie promised and its financial mobilization. I add here, this should be enforced immediately and be backed up by punitive measures for non-compliance. And before I part, Albert Einstein remarked once, in an interview in ‘The Saturday Evening Post’, October 1929, “Sometimes one pays most for the things one gets for nothing.” That pitiably is the end-plight of ‘non-entitled’ tax-payers! (Binayak Datta is a finance professional)
