Supreme Court slammed the freebies culture of State Governments

Source: The post “Supreme Court slammed the freebies culture of State Governments” has been created, based on “SC slams freebies culture, says states should open avenues for employment” published in “Hindustan Times” on  21 February 2026.

UPSC Syllabus: GS Paper-2- Governance

Context: The Supreme Court of India recently criticised the growing freebies culture while hearing a plea by Tamil Nadu Power Distribution Corporation Ltd regarding free electricity schemes. The Court observed that states should prioritise creating employment opportunities rather than distributing indiscriminate benefits. This debate highlights the tension between welfare policies and fiscal responsibility.

About the Freebies

1. Freebies are goods or services provided free of cost or at heavily subsidised rates without proper targeting of beneficiaries.
2. These schemes often include free electricity, free food grains, free bicycles, laptops, or unconditional cash transfers.
3. Political parties, including regional parties such as Dravida Munnetra Kazhagam, frequently promise such schemes during elections to attract voters.

Key Observations by the Supreme Court

1. The Supreme Court stated that excessive freebies can hamper economic development because they divert funds from productive investments.
2. The Court noted that many states are revenue-deficit states but still offer free schemes, which increases fiscal stress.
3. It emphasised that states should distinguish between those who can afford services and those who cannot.
4. The Court also expressed concern that excessive handouts could negatively affect work culture.
5. Finally, it suggested that states should focus on creating employment opportunities instead of distributing universal freebies.

Issues Associated with Freebies

1. Freebies create fiscal stress because they increase state expenditure without generating revenue, leading to higher debt levels.
2. They distort economic priorities because funds meant for infrastructure, education, and health are diverted to consumption-based schemes.
3. Freebies may create moral hazard because continuous handouts can reduce incentives to work or seek employment.
4. They encourage political populism because parties compete to offer more benefits for short-term electoral gains.
5. Freebies are often inefficiently targeted, as benefits sometimes reach wealthy households instead of the poor.

Arguments in Favour of Freebies

1. Freebies can promote social justice because they help vulnerable groups cope with poverty and inflation.
2. Welfare measures are consistent with the idea of a welfare state, which aims to support citizens in need.
3. Certain subsidies improve human development by increasing access to education, healthcare, and nutrition.
4. Some welfare spending also increases demand in the economy because poorer households tend to spend more of their income.

Difference Between Welfare and Freebies

1. Welfare measures are targeted and aim at long-term empowerment, while freebies are often universal and focus on short-term consumption.
2. Welfare policies improve productivity by investing in human capital, whereas freebies usually do not create lasting economic benefits.
3. For example, skill development programs create employment opportunities, whereas distributing free gadgets may not improve long-term productivity.

Way Forward

1. States should provide targeted subsidies using Direct Benefit Transfer systems to ensure that only the needy receive support.
2. Governments should prioritise employment generation through promotion of MSMEs, labour-intensive industries, and skill development programs.
3. Fiscal responsibility laws should be strengthened so that states maintain sustainable debt levels.
4. The Election Commission of India should require political parties to disclose the fiscal impact of their promises.
5. Governments should invest more in productive welfare such as education, healthcare, and infrastructure.
6. Power sector reforms should be implemented to reduce losses and ensure rational electricity pricing.

Conclusion: The Supreme Court’s remarks highlight the need to balance compassionate welfare policies with fiscal discipline. India should move from a culture of indiscriminate freebies to policies that empower citizens through employment and human capital development. Such a balanced approach will ensure inclusive and sustainable economic growth.

Question: Discuss the issues associated with the freebies culture in India. Also examine the difference between welfare and freebies and suggest measures to ensure fiscal prudence while protecting social justice.

Source: Hindustan Times