Despite repeated warnings from the Supreme Court about the detrimental impact of freebies on free and fair elections, political parties continue to offer them
In the din of blistering campaign in Delhi with the central theme of major political parties being on “freebies” - an acronym for ‘something given free of charge’ – it may be worthwhile to remind them about two observations made by the Supreme Court (SC). In an order in S Subramaniam Balaji vs the Government of Tamil Nadu & Ors given in July 2013, the SC had 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.” A decade later, hearing a PIL on ‘freebies’, on January 25, 2022, it observed “This is no doubt a serious issue, budget for freebies is going above the regular Budget”.
But, all this seems to have fallen on deaf ears. The state elections held since 2022 have witnessed political parties intensely competing with each other to mesmerise voters with a deadly combination of free goods and services and cash assistance. These have played a domineering role in winning elections. In Delhi, the offers have reached their ‘NADIR’. The starting point was an announcement by the finance minister Atishi in the budget for 2024-25 reg. The Mukhyamantri Mahila Samman Yojana (MMSY) under which, the Aam Aadmi Party (AAP) government will give Rs 1000 per month to all the women above the age of 18 in the national capital. Meanwhile, the ex-Chief Minister and convener of AAP Arvind Kejriwal promised an increase in income support under the MMSY to Rs 2,100 a month for every woman.
AAP has also promised free medical services to all above 60 at all hospitals; financing foreign education for Dalit students; free bus travel for all students; 50 per cent concession on metro fares; life insurance cover of Rs 10 lakh, accident insurance of Rs 5 lakh for all auto-rickshaw drivers and e-rickshaw pullers; wedding aid of Rs 1 lakh for their daughters and free coaching for their children; Rs 18,000 per month for all pujaris and granthis etc.
Not to be left behind, the BJP has come up with a package that is far more lucrative. It has promised Rs 2,500 a month to women under Mahila Samridhi Yojana (MSY); Rs 21,000 to pregnant women; LPG cylinders for Rs 500 and free cylinder on Holi and Diwali; a stipend of Rs 1000 a month to SC students pursuing technical and vocational courses; free education for needy students from KG to PG; free travel for students on Delhi Metro; Atal Canteens in Jhuggi Basti clusters providing nutritional meals for Rs 5 only; implementation of Ayushman Bharat scheme and additional cover of Rs 5 lakh for senior citizens. BJP has vowed to continue all existing schemes.
The Union Government’s standards of financial propriety lay down inter alia that “no authority shall exercise its powers of sanctioning expenditure to pass an order which will be directly or indirectly, to its advantage; and the expenditure from public moneys should not be incurred for the benefit of a particular person or a section of the people unless a claim for the amount could be enforced in a court of law or the expenditure is in pursuance of a recognised policy or custom”.
The reckless spending of the taxpayer’s money on freebies is neither a recognised policy nor is sanctioned in a court of law. It is blatant financial irregularity that amounts to bribing voters using public money solely for gaining advantage in electoral politics. Yet, the parties continue with it. What about the impact on the budget? Look at the BJP offer.
The number of women above the age of 18 years in Delhi is around 67 lakh. @Rs 2500 per month under MSY or Rs 30,000 annually to each woman, giving assistance to them all will require Rs 20,100 crore per annum. According to an estimate, there are about 15 lakh pregnant women. @Rs 21,000 per woman, the total outgo comes to Rs 3150 crore annually. As for subsidy on LPG, take consumption of 4 cylinders per household (HH). The cost supply is around Rs 1000 per cylinder, for two cylinders (Holi and Diwali), the subsidy will be Rs 2000 whereas for the other two @ Rs 500 each, the outgo will be Rs 1000 or Rs 3000 per HH. Taking a total of over 82.5 lakh HHs (current Delhi population of 330 lakh divided by 4 being the average HH size), the annual impact would be Rs 2500 crore.
Look at free education for needy students from KG to PG. According to the latest data available, around 9.91 per cent of Delhi’s population was considered below the poverty line in 2011-12.
The current population is 330 lakh, and the poor are 33 lakh. Of this, takes one-third or 11 lakh to be persons in the studying age 4 – 25 years. Taking the average expense of educating a child in India at the bare minimum of Rs. 20,000 per annum, the total expense on “needy students” in the city would be about Rs 2200 crore annually.The additional burden of these four guarantees alone on the Delhi government’s budget is Rs 27,950 crore (20,100+3150+2500+2200).
Other freebies would bloat this figure by several thousand crore. Already, the finances of the Delhi government are in a precarious state. 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.
The government’s current debt 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.
The situation has come to such a pass that CM Atishi has approached the Centre seeking a loan of Rs 10,000 crore from the National Small Savings Fund (NSSF). The precariousness of the state’s finances has a lot to do with the freebies which are estimated to cost about Rs 11,000 crore during 2024-25. Add to this at least Rs 30,000 crore being the impact of guarantees given during this election, freebies alone would dent the exchequer by Rs 41,000 crore annually.
Delhi government could be staring at an FD of close to Rs 50,000 crore. And, its debt would balloon to Rs 150,000 crore. The ball won’t stop here.When used to doles, people will want more and more and parties can’t say no. When, even a die-hard reformist and fiscal disciplinarian like Modi is forced to give way to freebies (courtesy, of Kejriwal’s brand of politics), things will only worsen. What if people stop working (very likely when they get money sitting at home) and tax-payers stop paying taxes (likely when they see their earnings being frittered away in distributing doles to those who don’t work)? The National Capital could be staring at fiscal disaster.
(The writer is a policy analyst; views expressed are personal)