Friday, December 2nd, 2022 19:39:57

Politics of freebies

Updated: September 26, 2022 12:39 pm

For the past few days, the popular Indian sweet delicacy “Revdi” is making news and has turned into a point of conflict between the governing Bharatiya Janata Party (BJP) and the Opposition. It all began when Prime Minister Narendra Modi warned that the culture of “freebies,” or “Revdi,” is harmful to the nation. It might have a wide range of negative economic effects. This was taken as a direct jab at Arvind Kejriwal’s Aam Aadmi Party (AAP), whose main electoral strategy is freebies. An incensed Kejriwal retaliated against Modi by claiming that the free power, healthcare, and education offered by the Delhi government are not handouts. They are rather efforts to elevate India to the position of number one in the world.

The political slanging match that has broken out over freebies between the ruling party and the opposition comes at a time when the Supreme Court is already seized of the matter and is hearing a petition on freebies filed by BJP leader Ashwini Upadhyay. Upadhyay wants political parties to stop promising these freebies before elections.

But, the question arises: is the freebie culture pushing for reforms in India or is it again throwing India into the fold of “Garibi hatao” era? It made former governments of Congress keep India poor with dole-outs and make the country poorer. One of India’s tragedies is that its first-past-the-post populist democracy has made it easier for bad economic ideas to spread than good ones. It only takes one state to start giving stuff away for free before it spreads across the country.

Here it is worth mentioning that subsidies are of two kinds — good and bad. The good ones do not impact other sectors, do not distort prices while uplifting the targeted populace. Bad subsidies have a negative effect on the other sectors. In this regard, free electricity and free bus ride can be cited as examples of subsidies that are not targeted and distort prices. Similarly, the free bus ride for women in the government city and town buses is not a targeted one as those who can afford the bus will also travel free. Against this backdrop, in India’s situation, it is crucial to act quickly if it is to meet the $10-trillion economy’s goal and begin to catch up to its existential neighbour, China. It is also necessary to act fast so as to find relief from pressures emanating from other parts of the world, like the Russia-Ukraine conflict.

In fact, there are no free meals in the world. The public itself provides the funding for giveaways through higher taxes or other means. It is comparable to transferring funds from your right pocket to your left pocket. However, the discussion should focus on improving political party accountability. When parties make such promises in manifestos, they are required to detail how they intend to pay for them. Information on the expected effects on the budget over the following five years, credit ratings, and other specifics may promote transparency and assist individuals in making well-informed decisions.

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