SC has come down against freebies, but how much burden are they adding?

Freebies are adding more to state burdens

The Supreme Court’s strong observation on India’s burgeoning freebie culture comes at a time when parties are doling out freebies to woo voters with little concern for state finances.

A Moneycontrol analysis found that the new BJP government in Delhi would need another Rs 13,000 crore to fund its welfare programmes, including the cash guarantee scheme for women, promised by the party in the run up to the polls.

The state already funds Rs 11,000 crore worth of benefits from the Budget, which the BJP has promised to continue. Analysis indicates that in case the government does go ahead with the plan, it would have fewer resources for capex and may even slip into a revenue deficit for the first time.

Delhi’s revenue surplus is set to decline to Rs 3,000 crore in FY25 from Rs 15,000 crore two years ago.

"Sorry to say, but by not making these people part of mainstream society, are we not creating a class of parasites? Because of freebies, when elections are declared...people are not willing to work. They are getting free rations without doing any work," Justices B R Gavai observed while hearing a matter concerning the right to shelter of homeless persons in urban areas along with Justice Augustine George Masih.

Delhi is not the only one to bear such a large burden. Analysis shows that Maharashtra is expected to add over Rs 35,000 crore of extra spending as the government plans to fulfill promises made during the 2024 election.

Moreover, with elections due in poorer states and parties seeing cash transfers as a sure shot way to win, analysis indicates that not all states could afford such transfers either.

Bihar, which is due for election in November, would have to undertake a burden of nearly 1.3 percent of the GDP if it promises RS 2,500 to poor women.