Tuesday, Dec 06, 2022

The Freebies Debate: Should Supreme Court Engage With A Subject That Falls Outside Its Purview?

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The Freebies Debate: Should Supreme Court Engage With A Subject That Falls Outside Its Purview?

Experts believe that this is a complicated political matter with various aspects of socio-economic welfare included in the idea of what is termed as a freebie

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Earlier this month, the Supreme Court started hearing a public interest litigation (PIL) opposing the practice of political parties offering freebies to win votes during elections. 

While the PIL was filed by advocate and Bharatiya Janata Party (BJP) spokesperson Ashwini Kumar Upadhyay,  the genesis of the latest debate on freebies can be traced back to prime minister Narendra Modi’s recent “revdi culture” swipe where he warned the youth against the attempts being made by opposition parties to collect votes by distributing free revdis (sweets). 

The comment and PIL have both attracted the ire of the opposition parties, like the Aam Aadmi Party (AAP) and Dravida Munnetra Kazhagam (DMK), governing states with their majorly welfarist policies, making them question what constitutes the term “freebies”. 

The political slugfest over freebies is an age-old one but it is the SC’s initial response that has come as a surprise to some. During the August 3 hearing of the PIL, the SC bench, headed by Chief Justice of India N.V. Ramana, proposed the constitution of an expert body, comprising several stakeholders like the Niti Aayog, Law Commission, Finance Commission, Reserve Bank of India and members of ruling party and opposition parties, to address the issue of freebies and poll promises. The apex court also sought suggestions from the petitioner, the Centre and the Election Commission that would enable it to pass the order for the formation of the committee. Interestingly, EC has already refused to be part of it. 

Experts, economists and other stakeholders believe that this is a complicated political matter, with various aspects of socio-economic welfare included in the idea of what is termed as a freebie.

Abhilash M.R., a constitutional expert and an advocate at the SC, says that the SC is committing judicial overreach and that since the committee was constituted in the portals of the SC, it would have greater legitimacy and has a two-fold impact. 

“One is, it undermines democratic processes. The other is, no political party will ever pay attention to such a sanctimonious intervention of the Supreme Court. This will only demean the honour of the judiciary. They are encroaching into a space where they are not expected to step in. The political class will start developing a sense of apathy towards the judiciary and orders of such nature would continue to be dishonoured. And what is at stake? The (judicial) institution,” he says.

For sure, no party is going to say goodbye to political freebies because the court constituted a committee, the advocate adds. 

Getting The Term Right

"Can the promise to provide free and compulsory education to all be termed as a freebie," the SC bench asked in its latest hearing of the PIL on August 17.

“Can we describe the promise of subsidy on power, seeds, and fertilizers to small and marginal farmers to make agriculture remunerative as a freebie? Can we describe the promise to provide free and universal health care as a freebie? Can we describe the promise to provide safe drinking water free of cost to every citizen as a freebie?” the bench observed.

With the SC getting into the debate, attention is back on the etymology of the term. While politicians and various arms of policymaking have thrown the word around, there is really no explanation or economic definition of the term. In public parlance, it is mostly associated with welfare measures that political parties extend to the socially and economically marginalised.

NR Bhanumurthy, vice-chancellor, Dr. B.R. Ambedkar School of Economics University, says that while there is no clear definition of a freebie, any policy measure that leads to a misuse of natural resources could be one way of looking at what exactly is a freebie, according to him. “If we are to look from a fiscal point of view, anything that leads to an increase in public debt in the medium term could be looked at as a freebie,” he adds. 

Talking about the Centre’s Pradhan Mantri Jan Arogya Yojana, Devendra Pant, chief economist, India Ratings & Research, says that the initiative was a direct intervention. “Is that a freebie? Or the excise duty cut on fuel that benefits the urban middle class—will that be termed as a freebie? It is a generic term that has no definition,” he adds.

Pant explains that for some, incentivising industry through tax cuts or reducing fuel prices through excise cut would not look as a freebie but others might brand them as such and that the whole debate revolves around definitions.

“Ultimately, the determination of what is a good or bad freebie is and always will be a political choice. A constructive debate must necessarily locate itself in the underlying political, economic and institutional context in which these so-called freebies are a feature of our electoral politics,” Yamini Aiyar, president and chief executive of the Centre for Policy Research, wrote in a piece in The Indian Express.

Politics Of Poll Promises 

During SC’s latest hearing, CJI Ramana also noted, “You cannot prevent a political party or individual from making promises that are aimed at fulfilling this constitutional mandate if elected to power. The question is what exactly qualifies as a valid promise,” the CJI observed, while pointing out that political parties had lost elections even after promising freebies.

Opposing the PIL, AAP filed an application saying that electoral promises such as free water, free electricity or free public transport were not freebies but examples of discharging constitutional responsibilities of the state towards creating a more equitable society. In the run-up to assembly elections in Punjab, AAP had promised free electricity and water, among other things.

AAP said that the PIL, which pretends it is in opposition to freebies, wanted legal action against the welfare model of economic development and targets states for their welfare expenditure. 

Ever since PM Modi’s “revdi” jibe, Delhi CM and AAP chief Arvind Kejriwal has defended his government’s spending on welfare schemes related to electricity, education, health, among other aspects and even attacked the ruling party without naming it at several occasions. 

Responding to AAP’s remarks, finance minister Nirmala Sitharaman had said, “Delhi Chief Minister has given a perverse twist to the debate on freebies. Health and education have never been called freebies.”

No Indian government has ever denied spending on health and education, she said, adding that by classifying them as freebies, Kejriwal was trying to bring in a sense of worry and fear in the minds of the poor. 

Backing Kejriwal’s point was Tamil Nadu CM M.K. Stalin who said that the expenditure on education and health cannot be freebies. “These are not freebies (but) social welfare schemes…These are implemented to benefit the poor and those in the fringes,” he was quoted in Business Standard as saying at a recent event.

Taking a clear dig at PM Modi, Stalin had said, “Some people have now newly emerged with the advice there should be no freebies…we are not bothered about that (sic)"

After AAP, DMK decided to jump in and knocked the SC’s door, seeking to be impleaded in the PIL. "It is humbly submitted that a welfare scheme providing a free service are introduced with an intent to secure a social order and economic justice under Article 38 to minimise the inequalities in income, status, facilities and opportunities. In no imaginable reality, it could be construed as a "freebie”. Such schemes have been introduced in order to provide basic necessities which the poor households cannot afford. They cannot be imputed to be luxuries,” its plea read, as per a Live Law report.

Additionally, the party said that only a state government-implemented welfare scheme cannot be judged to be classified as a freebie and the Union government giving tax holidays to foreign companies, waiver of bad loans of influential industrialists, granting crucial contracts to favoured conglomerates, etc. also have to be considered.

Fautlines In India’s Growth Story

One of the focal points of India’s economic liberalisation pitch was the creation of more jobs. It was believed that the excess agricultural labour force would be absorbed into manufacturing, thereby ushering social and economic mobility for a growing population. But the reality turned out to be different. 

Manufacturing is still struggling to make a mark in India and the majority of India’s jobs that got created post ’90s were in the services sector. Economist Amit Basole argued in a paper that in India’s peak growth years, most of the jobs it created were largely informal in nature.

As a result, while post-liberalisation growth lifted a chunk of the population out of poverty, it also created structural inequalities. Even those that got lifted out of poverty have been left in a rather vulnerable situation. World Bank data highlighted that between 2005-2012, those who managed to climb out of poverty can be pushed back into it following just one income shock.

The World Inequality Report found that in India, the ratio of private wealth to national income jumped from 290 per cent in 1980 to 555 per cent in 2020. The top 10 per cent of the country’s population holds 57 per cent national income, the report found. The Covid-19 pandemic further exposed the limits of neo-liberal economics and made people more aware of being left behind in India’s growth story. 

The CJI, during the PIL’s latest hearing, said, “I don’t think voters are looking for freebies. Given an opportunity, they will look for dignified earnings. We have examples of schemes such as Mahatma Gandhi Rural Employment Guarantee Scheme which offered dignified earning and also created public assets in rural India,” the CJI said.

Wading into the debate of freebies would call to address what is welfare and what is “free”. Free foodgrain was distributed by the Centre during the pandemic. The Pradhan Mantri Garib Kalyan Anna Yojana which made foodgrain available to approximately 80 crore ration cardholders was what protected the majority of India’s population from starvation.

During the mid-2000s, the public distribution system (PDS) had become a big political issue. Lower PDS prices became an electoral issues in several southern states. To combat this, in 2013, the Parliament unanimously passed the National Food Security Act which expanded the scope of PDS to two-third of India’s population. As coverage increased, scope of exclusion reduced.

Appearing for the Centre in the ongoing SC hearing on the PIL, solicitor general Tushar Mehta said, “We are not opposed to socialism but if social welfare means distributing everything for free then it is an immature understanding of the term social welfare.” 

Dipa Sinha, faculty at Dr. B.R. Ambedkar University Delhi, says that when a government in a democracy runs a welfare scheme, it is not giving it for free.

“Government is not a monarchy that distributes free services. It is public money that is being given to the public. A democratically elected government collects taxes and decides how to spend it. Yes, there are accountability mechanisms like Parliament and the Constitution. As long as things happen within that framework, governments are just playing their roles,” Sinha says.

The Cost Of Welfare

The most obvious criticism of welfare spending is to highlight how much debt it entails. Recently, an article in the RBI bulletin pulled up a few states for the precarious position of their finances and blamed “freebies”, like power subsidies, for it. 

The piece pointed out that based on the debt-gross state domestic product (GSDP) ratio in 2020-21, Punjab, Rajasthan, Kerala, West Bengal, Bihar, Andhra Pradesh, Jharkhand, Madhya Pradesh, Uttar Pradesh and Haryana have turned out to be the states with the highest debt burden, accounting for around half of the total expenditure by all state governments in India. The report says that Kerala, Jharkhand and West Bengal exceeded the debt target for 2020-21 set by the 15th Finance Commission. Interestingly, a good chunk of the indebted states mentioned in the report have had a historical focus on social welfare.  

“New sources of risks have emerged—relaunch of the old pension scheme by some states; rising expenditure on non-merit freebies; expanding contingent liabilities; and the ballooning overdue of DISCOMs - warranting strategic corrective measures,” the report said.  

Several economists have opined that debt in itself is not bad but what is crucial is the nature of spending. Social-sector spending is necessary to provide a safety net to the vulnerable which, in the long term, would help them move towards self-sufficiency.

“Free education or free health services for the marginalised are interventions that governments across the globe undertake. As long as these services are targeted, it should not be an issue. In universal [schemes], chances of leakage are high. The problem now is with the limited fiscal space that various governments have and if they can undertake a larger number of interventions,” says Pant.

According to Abhilash, the concept of a freebie would dissipate when the quality of the political demography enhances which happens with more literacy, greater social-economic well-being and more political awareness. 

As for the SC, CJI Ramana, during the latest hearing, essentially summed up the conflict points in the debate by saying, “Concern is about the right way of spending public money…Some say taxpayers’ hard-earned money is wasted on freebies. And some others say, it is essential to spend public money on welfare measures. Is this court competent to examine these questions? The issue is getting increasingly complicated.” All eyes are now set on the next hearing on August 22 as the SC attempts to settle this complicated debate.