Poorly-directed freebies may wreak havoc on state finances and have adverse consequences on the economy as in the case of Sri Lanka, experts say while noting it is important to define a freebie and how it is different from welfare expenditure.
Recently, the Supreme Court said freebies at the cost of taxpayers’ money may push the country towards imminent bankruptcy.
Economic think tank ICRIER Chairman Pramod Bhasin said,"Most freebies (unless at a time of huge urgency such as Covid) which are often poorly directed are a fiscal mistake with significant adverse consequences. And these exist in most states and under most forms of governments." Bhasin noted that "political compulsions" cause most politicians to announce freebies as their way of capturing votes.
"If there was a way to limiting these within each state and also centrally that would be a welcome move—but that is also for the elected representative to decide," he said, adding that there is a need to define a freebie and how it is different from welfare expenditure.
Echoing similar views, Institute for Studies in Industrial Development (ISID) Director Nagesh Kumar said State governments need to be responsible in terms of fiscal management unless they wish to get into an unsustainable situation.