Not too long ago, poll freebies used to be an exception. But now it has become a norm with almost every other party promising it

Barely a week before the Election Commission of India (ECI) is set to announce the schedule for the polls for Lok Sabha elections when the Code of Conduct will come into force, the Aam Aadmi Party (AAP) has given yet another dose of mesmerizing voters in Delhi with freebies – an acronym for “something given free of charge” – a bizarre practice it started in the February 2020 elections.In the budget for the financial year (FY) 2024-25 presented by the Delhi finance minister Atishi in the assembly on March 4, 2024, she announced the Mukhyamantri Mahila Samman Yojana (MMSY) under which, the AAP government will give Rs 1000 per month to all the women above the age of 18 in the national capital.

 Only registered voters will be eligible for this scheme. Further, she should not be a member of any pension scheme, not a government employee and not pay income tax. 

The top brass of AAP describes the Scheme as ‘revolutionary’, aimed at ‘empowerment of the women’ and ushering in what it terms as ‘Ram Rajya’ (a euphemism borrowed from the Hindu epic Ramayana where the system of governance ensured ‘equal rights alike of prince and pauper’). Shorn of rhetoric, the key question we need to examine is whether MMSY could be justified as a welfare scheme.

A welfare scheme is rooted in three basics viz. the state assistance goes to persons who are poor and primarily focused on bare essentials such as food, fuel, water, housing, education and health; it should be backed by well-orchestrated efforts to garner revenue so that budgetary position is not destabilized; finally, it is given for a ‘limited period’ after which the beneficiaries should stand on their own.The Scheme isn’t about bare essentials; instead, a lump sum amount is given which the beneficiary can spend in the manner she likes. Moreover, it doesn’t focus on the poor alone. The eligibility conditions won’t rule out financially well-off women also getting the benefit.       The requirement of the beneficiary ‘not paying income tax’ doesn’t mean that they will be excluded.     Under the extant IT dispensation, a person having an annual income of Rs 700,000 (or around Rs 60,000 per month) is not required to pay income tax. It makes no sense to make her a beneficiary under the Scheme, but it does. Consider another case where the woman happens to be a housewife. She doesn’t earn. But, she belongs to a very rich family requiring no assistance yet, she will be eligible.   The FM has made an allocation of Rs 2,000 crore for implementation of the Scheme during the FY 2024-25. This falls substantially short of the amount that will be required. 

The number of women above the age of 18 years in Delhi is 67,00,000. @Rs 1000 per month or Rs 12,000 annually to each woman, giving assistance to them all will require Rs 8000 crore - four times the budget allocation.

But, the government intends to exclude government employees, those drawing pensions and paying income tax. After these exclusions, the beneficiaries would be around 4500,000. Even for this reduced number, the fund requirement will be Rs 5400 crore which is nearly three times the allocation. 

The mismatch between the availability of funds and the requirement will make the Scheme prone to the use of discretion, corruption and nepotism in choosing the beneficiaries. Moreover, considering that a beneficiary only needs to have a voter ID (not an Aadhaar card which is based on biometric details of a person hence, more authentic), this will make it susceptible to fake persons getting payments.

Collateral damage will be socio-economic tensions as some women would get the benefit even as others are left out.  To avoid these tensions and just in case, the government decides to give assistance to all the 6700,000 women above 18 years sans any rider - as has been the case with electricity subsidy - it will have to spend Rs 8000 crore annually.        While handing down the Scheme, the AAP government is unmindful of the implications for its budgetary position which contrary to the claims made by the Chief Minister is not robust.   

Against the total expenditure of Rs 76,000 crore during FY 2024-25, the total revenue is estimated at around Rs 58,000 crore. This leads to a fiscal deficit (FD) of Rs 18,000 crore which is 80 per cent higher than the FD for FY 2023-24 at Rs 10,000 crore. The surge in FD is despite a steep reduction of over 30 per cent in capital expenditure from the budget estimate (BE) of Rs 22,000 crore for FY 2023-24 to Rs 15,000 crore for FY 2024-25.

Meanwhile, the government’s expenditure on social security and welfare schemes has been increased by over 40 per cent from the BE for 2023-24 of Rs 4750 crore to Rs 6700 crore during 2024-25. The estimate for FY 2024-25 includes Rs 2000 crore for the MMSY. If this were to become Rs 8000 crore (as discussed above), it could end up spending Rs 12,700 crore which will be 2.7 times the BE for 2023-24.   

The current debt of the Delhi government is about Rs 40,000 crore. But, this is not all. We also need to add the loans taken by its departments such as Delhi Jal Board (DJB): Rs 70,000 crore and Delhi Transport Corporation (DTC): Rs 10,000 crore as the liability for servicing those debts is vested entirely in the NCT government.

This takes the total debt of Delhi to Rs 120,000 crore. This is far from being a healthy situation.   Finally, unlike any well-intentioned scheme that could have a sun-set, a poll-induced free - the MMSY unambiguously falls in this category - once given, is more likely to stay eternally.Not long ago, poll freebies used to be an exception. But, now it has become a norm with almost every other party promising it.

 If allowed to continue, this is sure an invitation to economic disaster. Even the Supreme Court (SC) has expressed concern. Hearing a PIL seeking directions against ‘freebies’ on January 25, 2022, it observed “This is no doubt a serious issue, budget for freebies is going above the regular Budget. This disturbs the level playing field”. The way forward is to ‘legally’ prohibit parties from promising freebies.  But, we have a speed breaker erected by none other than the top court itself.

 In an order in S Subramaniam Balaji vs the Government of Tamil Nadu & Ors in July 2013, it was observed that the distribution of freebies of any kind influences all people. “It shakes the root of free and fair elections to a large degree.”

Yet, it held:-“the promises in the election manifesto cannot be construed as ‘corrupt practice’ under the Representation of People Act (RPA), or any other prevailing law and, hence, distribution of freebies can’t be stopped when the ruling party uses public funds for this purpose through the passage of Appropriation Acts in the state Assembly”.

Currently, a three-judge bench, headed by the Chief Justice of India (CJI) is hearing a plea to take a re-look at the above stance. The SC should give an order barring poll freebies as political parties who are deeply rooted in this practice left to themselves, won’t enact a law to curb it.

(The wrier is a policy analyst; views are personal)