Freebies and the Fiscal Future: A Vicious Political Circle

The recent observations of the Supreme Court of India on the growing culture of “freebies” in electoral politics have once again brought into sharp focus a troubling pattern in India’s democracy. While welfare is a constitutional commitment and social justice a moral imperative, the line between responsible governance and competitive populism is increasingly blurred. The Court’s concern is not about compassion; it is about sustainability, accountability and the long-term health of public finances.

Over the past decade, electoral campaigns across states have become arenas of competitive promises. Free electricity up to a certain number of units, free bus travel for women, loan waivers, free appliances, cash transfers — each election seems to raise the stakes. Political parties argue that such measures are instruments of social equity, helping the poor manage rising costs of living. Opponents call them fiscally reckless handouts. The truth lies in a complex space between these two narratives.

The vicious circle begins during elections. Parties, eager to consolidate vote banks, announce attractive schemes that provide immediate relief. Free electricity, for instance, offers tangible and visible benefit to households struggling with monthly bills. Free bus tickets enhance mobility, especially for women, increasing access to jobs and education. These measures generate goodwill and political momentum. Once implemented, they create a direct relationship between the beneficiary and the ruling party.

However, once in power, governments confront the fiscal reality. Subsidies must be financed either through higher borrowing, diversion of funds from capital expenditure, or increased taxation. Revenue deficits widen. Infrastructure projects get delayed. Long-term investments in health, education quality, and industrial development may suffer as funds are locked into recurring subsidy commitments.

Yet discontinuing such schemes becomes politically near-impossible. Any attempt to roll back free electricity or reduce subsidised bus services is portrayed by opposition parties as anti-poor. Beneficiaries, now accustomed to the relief, resist withdrawal. Political rivals promise even more generous benefits. Thus, the cycle deepens: promise, implement, institutionalise, and defend — regardless of fiscal strain.

In the short term, freebies undeniably produce positive outcomes. Free bus travel can raise female workforce participation and social inclusion. Free electricity up to a threshold can protect vulnerable families from energy poverty. Loan waivers may offer temporary respite to distressed farmers. These measures can boost consumption demand, which in turn stimulates local markets. Politically, they help governments signal responsiveness to citizens’ hardships.

But the long-term implications are more complex. Economically, persistent revenue expenditure without corresponding growth in productive capacity can weaken state finances. Mounting debt limits future policy flexibility. Credit ratings may suffer, raising borrowing costs. When subsidies crowd out capital investment, the economy risks slower growth, fewer jobs, and reduced competitiveness.

Politically, the culture of freebies alters the nature of electoral competition. Elections shift from debates about governance, structural reform, and institutional accountability to auctions of promises. Instead of asking which party has a credible development roadmap, voters are nudged to compare the size of immediate benefits. This erodes policy seriousness and incentivises short-term thinking.

Socially, the implications are layered. On one hand, welfare schemes can empower marginalised communities and reduce inequality. On the other, prolonged dependency without parallel investment in skills, productivity, and employment generation may entrench a subsidy mindset. Citizens may begin to evaluate governments primarily by the scale of direct transfers rather than quality of public services. The social contract risks narrowing into transactional politics.

There is also an inter-generational dimension. Today’s borrowing to finance recurring subsidies becomes tomorrow’s debt burden. Young taxpayers inherit fiscal stress created by electoral cycles they did not shape. Sustainable welfare requires a careful balance between compassion and prudence.

None of this suggests that social support must be abandoned. India’s constitutional framework envisions a welfare state. The real question is one of design and discipline. Targeted subsidies, time-bound schemes, transparent fiscal disclosures in party manifestos, and independent assessment of financial viability can create accountability. Welfare linked to human capital — education, healthcare, skill development — produces long-term dividends rather than recurring liabilities.

The Supreme Court’s intervention serves as a reminder that democracy must reconcile empathy with economics. Free electricity and free bus tickets may offer immediate relief and political dividends, but without structural reform and revenue growth, they risk tightening a fiscal noose. The challenge before political parties is not whether to help citizens, but how to do so responsibly.

India’s democracy thrives on choice. But that choice must not devolve into competitive populism divorced from fiscal reality. Breaking the vicious circle requires political courage — the courage to explain costs honestly, to prioritise sustainable development over instant applause, and to treat voters not merely as beneficiaries, but as stakeholders in a shared economic future.