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The views enumerated below will be helpful in any topic given on Freebies in the SSB Interview:

A bench of Chief justice of India said that the freebies will destroy the economy of India. Freebies are different from welfare measures. Ultimately it is the political parties which make election-eve freebie promises and contest elections.

GD Topic: Freebies being promised and distributed by Politicians have become a part of the political process in India. What is your opinion about the freebies?

(a) Freebies are Politicians responding to people’s wishes or 

(b) Freebies are required to be controlled by political parties through self-regulation or

(c) Freebies must be controlled through law formulated by an apex body

Freebies in simple terms refer to a public welfare measure involving any good or service that is offered free of cost by the government to its citizens. Freebies like Free colour TVs, grinders, food grains, laptops, cycles, gold, washing machine, cows, sheep, cash transfers to farmers, health insurance and fertiliser subsidies have been doled out to the Indian voters. There is a need to distinguish freebies from merit goods. Any expenditure which brings economic benefits, such as the public distribution system, employment guarantee schemes and states’ support for education and health cannot be labelled as freebies.

(a) Freebies are Politicians responding to people’s wishes: -

• In 1982, when the then Chief Minister, MG Ramachandran or MGR, expanded the mid-day meal scheme for schoolchildren, he faced opposition from all quarters. However, the scheme drastically improved enrolment, attendance and absenteeism in the schools. About a decade later in 1995, it was rolled out nationwide by the Centre. We understand that free-of-cost primary education does not qualify as a freebie. Similarly, the bare necessities in smaller quantities cannot be labelled as freebies.
• More than 21% of our population lives below the poverty line. Hence, freebies like public distribution systems, employment guarantee schemes and states’ support for education and health are required in our country. If our democracy is for the people then it is but natural for the political parties to include such benefits in their manifesto and implement them when they come to power in the State or at the Centre. Thus, Freebies are Politicians responding to people’s wishes and are a part of the political process.
• Some of my friends would argue that free electricity up to 300 units and free Wifi are populist and do not fall under essential needs. However, I disagree with them because most poor families living in Shanties hook up wires with the passing poles which is a crime and a danger to life. Once meters are installed in every shanty, the power theft would be checked and anyone consuming more than 300 units will have to pay for the consumed electricity. Similarly, free wifi in a limit will ensure education and regulation through internet access.
• Income tax deductions or exemptions and corporate tax reductions could be classified as freebies but they are also conscious political decisions. Whenever taxes are reduced it leaves more money at the hand of the exchequer. Thus, the Govt reduces taxes which leads to increased consumption and helps the growth of manufacturing and services. The Govt can always revert to normal when inflation rises.  Hence, the timing of dolling out freebies is also a way to increase growth.
• In the long run, the social and economic benefits of certain freebies like soft loans far outweigh the financial costs they impose, even if they seem cumbersome in the short term. For example, the Mudra loan created more than 1.1 crore jobs between 2015 -2018. This makes labelling expenditure as merit or non-merit at the time of rollout difficult.
• I propose that a State should be free to decide on freebies if it has the money. The problem arises when states dole out freebies, merit or non-merit, beyond their fiscal capabilities. Thus the blanket ban on freebies is unnecessary.
• The solution in a democratic setup to any promise by a political party is that there should be strict vigilance by civil society groups that deal with electoral reforms. Civil society groups should constantly disseminate the feasibility of every promise made in a party's manifesto. If a political party can duly implement a promise, it is the voters' right to know the ground reality of the governance agenda and vote for the party of their choice.

(b) Freebies are required to be controlled by political parties through self-regulation:-

• Every State has unique resources and thus is growing at a different pace. In addition, every State has a different percentage of people living below the poverty line and having dissimilar access to resources or jobs. Thus the political parties draft out a different manifesto for their voters in every State. It will be unfair to regulate freebies by one common law.
• The public debt to GDP ratio cannot be similar for every State due to their different stages of development. States have to borrow money for expenditure on physical infrastructures like roads, energy or irrigation which leads to the creation of an environment that is conducive for private investment to flow into the manufacturing and services sector contributing to higher momentum of growth. At the same time development of human capital is essential to bring about all-around development of the economy and accordingly the taxpayer’s money is best spent on social sectors like education and health. So the debt of a State is not increased by freebies alone. Anyway, the political parties cannot promise unlimited freebies because they need money for developmental schemes promised by them. The solution lies in the State and the Centre govt bringing out a debt paper every six months.
• It has been observed that any freebie promised by a party is taken into a debate by the media. The leaders of that party are asked to talk about the total cost included in that promise and explain what existing public service is going to be cut to finance the freebie. Parties can't say they will generate new revenues and pay for it. The leaders do explain how they are going to fund the promised freebie.
• Political parties which do not have a chance of winning the elections promise the moon. For example, in the 2019 Lok Sabha elections, the Congress party promised Rs 6000/- per month in bank accounts of the poorest of the poor (50 million families) but the voter was not lured by them. At the same time, the BJP was a serious contender to form a Government and avoided the competition to promise more to the poor voter because they thought it was not financially viable in the long run. Hence, I wish to bring out that the political parties regulate themselves because they are answerable to people in the next election.
• The Supreme Court has indeed asked a body to rein in the freebies. The debate on freebies also needs to be looked at from the perspective of the income of states. The end of the Centre’s GST compensation payout has further reduced the headroom available with states for social sector expenditure.
• A political party can Improve efficiency and cut costs to fund the freebies in case the budget is limited. If freebies can be vectored in by reducing the cost of delivery or wastages (such as direct bank transfer) such changes must be welcome as it increases overall welfare. For example, by Jul 2022 India was able to administer over 201 crores Covid -19 vaccine free of cost to its citizen.

(c)  Freebies must be controlled through law formulated by an apex body

• Most of the electorate in India is not educated enough to understand fiscal prudence and the fact that the mindless freebies would lead the country to an economic disaster. At the same time, the political parties cannot be expected to self-regulate themselves when they can entice the voters with freebies. Hence, the Supreme Court asked for an apex body comprising of Niti Aayog, the Finance Commission, ruling and opposition parties, the RBI, and other stakeholders to offer recommendations on how to manage freebies given out by political parties during election campaigns.
• When all parties offer freebies competing with each other to win votes by bribing voters. We cannot leave the issues to voters to decide whether the offer of freebies is possible. It is time freebies are put to an end altogether because the freebies can only be funded by increasing the revenue otherwise the State will incur debts. The only alternative for the government to increase revenue is by taxing the people but there is a limit to taxation. The State governments have not agreed to bring fuel and liquor under GST because they wish to fund their freebies through an extra tax on Fuel and liquor. There should be a law to give justice to the taxpayer.
• In 2022 the RBI paper said that the provision of free electricity, free water, free public transportation, waiver of pending utility bills and farm loan waivers are often regarded as freebies, which potentially undermine credit culture, and distort prices through cross-subsidisation. This erodes incentives for private investment and disincentivises work at the current wage rate leading to a drop in labour force participation. Hence, freebies should be regulated by making appropriate laws.
• Punjab is among the most indebted states and its tax revenue has been declining over time. Punjab spends over 13% of its revenue expenditure on subsidies, one of the highest. Yet, in 2022 the ruling Aam Aadmi Party fulfilled its poll promise of providing free electricity to every household up to 300 units. AAP should have first waited for the fiscal condition of Punjab to improve. A law could have avoided such fiscal imprudence.
• The Model Code of Conduct comes into force immediately on the announcement of the election schedule by the commission for the need of ensuring free and fair elections. Its main purpose is to ensure that ruling parties, at the Centre and in the States, do not misuse their position of advantage to gain an unfair edge. It has happened in the past when the Govt in power was asked by the EC to postpone the budget and instead come out with a vote-for-account (temporary budget). Therefore it is only fair to have a similar restriction on freebies by the EC.
• Freebies are being paid by the taxpayer and not funded by the political party. Hence, the freebies announced ahead of the election vitiate the level playing field between parties. The freebies also set up a competition amongst the political parties to outdo each other's manifesto in wooing the masses with promises which are against fiscal prudence. Hence, the CAG should bring freebies also under the model code of conduct.
• Too much emphasis on subsidies and freebies distorts the financial position of the State. The criticality of financial prudence can only be overlooked if one is prepared to face a financial crisis like the Sri Lankan economy is facing today. A financially rich State like Delhi can give more subsidies than Punjab. Hence, the Apex body needs to formulate boundaries within which political parties must announce the freebies.