{"id":201684,"date":"2022-08-24T16:38:07","date_gmt":"2022-08-24T11:08:07","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=201684"},"modified":"2022-08-24T16:38:07","modified_gmt":"2022-08-24T11:08:07","slug":"are-freebies-a-way-to-mask-state-inaction","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/are-freebies-a-way-to-mask-state-inaction\/","title":{"rendered":"Are freebies a way to mask state inaction?"},"content":{"rendered":"\n

Source<\/strong>: The post is based on the article \u201cAre freebies a way to mask state inaction?\u201d <\/strong>published in The Hindu <\/b>on\u00a024th<\/sup>\u00a0August 2022<\/strong>.<\/p>\n

Syllabus<\/strong>: GS 2 \u2013 Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes.<\/p>\n

Relevance<\/strong>: About the impact of freebies.<\/p>\n

News<\/strong>: In promising freebies, the political parties and members play with the ground reality of the fiscal condition of the state.<\/p>\n

What are freebies?<\/span><\/h5>\n\n\n\n
Read here:\u00a0PM\u2019s \u2018revdi\u2019 remark: We need to disentangle good subsidies from bad<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
The evolution of freebies in various states<\/h5>\n

In Tamil Nadu<\/strong>, DMK founder C.N. Annadurai provided just 1 kg of rice for \u20b91 after he got elected. Later the freebies got expanded beyond rice, to gas stoves, colour TVs, laptops, payments for household work etc.<\/p>\n

The Delhi<\/strong> government has notably offered water and electricity (up to a certain limit) free to the city\u2019s voters.<\/p>\n

The Himachal Pradesh<\/strong> government is offering locals free power upto 125 units, along with free water in villages and a 50% discount on bus fares for women.<\/p>\n

In Assam<\/strong>, the State government has announced direct and indirect cash benefit schemes worth \u20b96,000 crores impacting nine lakh beneficiaries.<\/p>\n

Every year, governments at the Centre and State expand the distribution<\/strong> of private goods such as LPG cylinders to ordinary citizens.<\/p>\n\n\n\n
Read more:\u00a0The \u2018freebies\u2019 debate<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
What are the impacts of freebies?<\/h5>\n

Neglect the necessary infrastructure<\/strong>: Instead of building public assets, social capacity and society, the policymakers shifted their attention towards direct transfers and welfarism<\/strong> (via distribution of private goods for free). This causes a lack of government interest in delivering good public services.<\/p>\n

Financial burden on state exchequer<\/strong>: Recently announced freebies in many States are difficult to fund. For instance, According to the RBI data, Andhra Pradesh announced freebies in FY23 that would consume almost 30.3% of its own tax revenue; for Madhya Pradesh, this figure was close to 28.8%; for Punjab, this was around 45.4%; and for West Bengal, it was about 23.8%. All of this will increase the government debt-to-GDP ratio.<\/p>\n

Increase NPA<\/strong>: Over the past five years, banks have written off loans worth \u20b910 lakh crore. The share of public sector banks in such NPA write-offs was typically between 60% and 80%.<\/p>\n

Cost to the voter<\/strong>: When promised freebies are fulfilled, then ordinary voter has to pay the cost in the form of higher taxes or the opportunity cost of less development.<\/p>\n\n\n\n
Must Read: End this asymmetrical conflict over \u2018freebies\u2019<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
What should be done?<\/h5>\n

a)<\/strong> Governments announcing freebies should be required to provide a funding plan<\/strong> to bolster Parliament (and State Assembly) budgetary understanding and enhance their ability to act. The Election Commission should push political parties to provide a funding mechanism for such promises., b)<\/strong> A Budgetary Office should be established<\/strong> to aid in writing policies and conducting budgetary analysis, c)<\/strong> Transfers towards capital expenditure schemes should be prioritised<\/strong> over other schemes.<\/p>\n\n\n\n
Read more: Should there be limits on \u2018freebies\u2019?<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

So, to end the freebie culture, governments must stick to fiscal probity and make credible policies. This will provide a network of competent public hospitals, high-quality schools and provides an enabling environment for the working population to build skills etc.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on the article \u201cAre freebies a way to mask state inaction?\u201d published in The Hindu on\u00a024th\u00a0August 2022. Syllabus: GS 2 \u2013 Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes. Relevance: About the impact of freebies. News: In promising freebies,… Continue reading Are freebies a way to mask state inaction?<\/span><\/a><\/p>\n","protected":false},"author":10311,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[212,10498],"class_list":["post-201684","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-2","tag-the-hindu","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/201684","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10311"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=201684"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/201684\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=201684"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=201684"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=201684"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}