My subsidy, your revdi
GS Paper 2: Governance, Transparency, Accountability and Issues relating to the development and management of Social Sector/Services
Mains exam: Freebies and its impact on representative democracy
The Prime Minister has opened an important conversation over wasteful spending between people and their representatives.
Issue related to freebies
● It is hard to distinguish between freebies and subsidies. For example What may be deemed as necessary state support for the population in one state may not be seen in the same way in another.
● As per a recent RBI report, given the huge losses incurred by power distribution companies, a bailout in 18 large states, structured along the lines of UDAY, would cost these governments around Rs 4.3 lakh crore or 2.3 per cent of their combined GSDP.
○ To put this number in perspective, it is more than what the Union government spends on education, health or rural development.
○ For states like Tamil Nadu, Madhya Pradesh and Rajasthan, the situation is particularly worrisome.
○ A bailout of this magnitude will only further restrict their fiscal space. Ultimately, someone has to pay. Because no freebie is really free.
● The basic argument is that these are a waste of resources and place a burden on already stressed fiscal resources.
● A Bench headed by the Chief Justice of India recently heard a public interest litigation in which the petitioner argued against the promise of ‘irrational freebies’ by claiming that these distort the electoral process.
Stand of Supreme Court on this issue:
● The Chief Justice of India, N.V. Ramana, heading a Bench hearing a petition ﬁled in public interest against the distribution or promise of ‘freebies’ ahead of elections, has made it clear that the Court is not going to issue guidelines, but only ensure that suggestions are taken from stakeholders such as the NITI Aayog, Finance Commission, Law Commission, RBI and political parties.
● All these institutions, he has said, can submit a report to the Election Commission of India (ECI) and Government.
● A suggestion that Parliament could discuss this issue was met with scepticism by the Bench, which felt that no party would want a debate on this, as all of them support such sops.
● The Bench also disfavoured the ECI preparing a ‘model manifesto’ as it would be an empty formality.
○ The Court’s concern over populist measures seems to resonate with the Government too, as the Solicitor General submitted that these distorted the voter’s informed decision making; and that unregulated populism may lead to an economic disaster.
● Supreme Court, in S. Subramaniam Balaji vs Government of Tamil Nadu (2013) addressed these questions and took the position that these concerned law and policy.
○ it upheld the distribution of television sets or consumer goods on the ground that schemes targeted at women, farmers and the poorer sections were in furtherance of Directive Principles;
○ And as long as public funds were spent based on appropriations cleared by the legislature, they could neither be declared illegal, nor the promise of such items be termed a ‘corrupt practice’.
○ It had, however, directed the ECI to frame guidelines to regulate the content of manifestos.
Steps taken by ECI
● This year in April, In its affidavit to SC, the EC said, “The Election Commission of India cannot regulate state policies and decisions which may be taken by the winning party when they form the government. Such an action, without enabling provisions in the law, would be an overreach of powers.”
● However after the direction given by SC in S. Subramaniam Balaji vs Government of Tamil Nadu (2013), ECI included in its Model Code of Conduct a stipulation that parties should avoid promises “that vitiate the purity of the election process or exert undue inﬂuence on the voters”.
○ It added that only promises which were possible to be fulﬁlled should be made and that manifestos should contain the rationale for a promised welfare measure and indicate the means of funding it.
Positive aspect of Freebies
● Helps the poor or unserved groups of society: Schemes like PDS, PMGKY, MNREGS etc. provide support to people from lower levels of society.
● The midday meal scheme for children across India is also a freebie. But look at the colossal difference it has made to school enrolment and, more important, retention rates.
○ Not to mention the invaluable improvement in the health of a whole generation of children, thanks to improved nutrition through a well-balanced meal.
● Free transport, as provided by the Delhi Govt, will definitely improve women’s participation in the workforce, particularly in low-paying jobs.
● Giving scholarships to five crore minority students, half of them girls is also an example of this.
● It is the responsibility of all the political parties to understand that It is not about how cheap the freebies are but how expensive they are for the economy, especially in the states where debt is already high.
● As suggested by the Supreme Court, the Finance Commission could be tasked with formulating the criterion to come up with the criterion for freebies.
● It is the need of the hour to make ECI more powerful in dealing with the issue of freebies.
The Governments must distribute the Goods and services very judiciously. Governments that do not pay adequate attention to the strength of their fiscal health eventually become exposed to the cost of the choices that they make.[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]