Context & The Gist
The article discusses the increasing trend of political parties offering ‘freebies’ during election campaigns, specifically in the context of the Bihar elections. It argues that this short-term approach undermines fiscal responsibility and diverts attention from long-term economic development, failing to address the evolving aspirations of the electorate, particularly its young population.
Key Arguments & Nuances
- Shift from Public Goods to Freebies: Traditionally, governments focused on providing public goods (roads, education, healthcare) with long-term benefits. The current trend prioritizes immediate, visible ‘freebies’ like cash transfers and free electricity.
- Erosion of Trust & State Capacity: Voter cynicism regarding the state’s ability to deliver public goods and politicians’ short-term electoral focus contribute to the demand for and supply of freebies.
- Fiscal Implications: The promises made are fiscally unsustainable and divert resources from crucial long-term investments in infrastructure, education, and skill development.
- Changing Economic Landscape: Bihar’s economy is shifting towards services and construction, with a young population. Policies should reflect these changes and focus on job creation and skill development.
UPSC Syllabus Relevance
- GS Paper II: Polity & Governance – Issues relating to the planning, formulation, and implementation of policies and programs.
- GS Paper III: Economy – Government Budgeting, Inclusive Growth, and the effects of policy on sectors of the economy.
- GS Paper III: Economy – Resource mobilization and the impact of welfare schemes on fiscal sustainability.
Prelims Data Bank
- Article 282 (1) of the Constitution: Grants power to the Union or a State to make any grants for any specified purpose. This is often used for implementing welfare schemes.
- Fiscal Responsibility and Budget Management (FRBM) Act, 2003: Enshrines fiscal discipline to reduce the fiscal deficit. Frequent freebie announcements can strain FRBM targets.
- Sustainable Development Goals (SDGs): Focus on long-term development. Freebies can divert resources from achieving these goals.
Mains Critical Analysis
The practice of offering pre-election freebies presents a complex challenge to fiscal sustainability and inclusive growth. While intended to address immediate needs and garner votes, these promises often lack a robust economic rationale and can lead to revenue deficits. This can hinder the state’s ability to invest in crucial areas like education, healthcare, and infrastructure, ultimately impeding long-term development.
Challenges
- Moral Hazard: Creates a dependency on government handouts, reducing incentives for self-reliance and entrepreneurship.
- Distorted Resource Allocation: Diverts funds from productive investments to consumption-based schemes.
- Political Populism: Encourages short-sighted policies driven by electoral gains rather than sound economic principles.
Opportunities
- Targeted Welfare: Well-designed welfare programs can address genuine needs and promote social justice.
- Empowerment through Skill Development: Investing in skill development can equip the youth with the tools to participate in the economy.
- Promoting Economic Growth: Policies that attract investment and create jobs can provide sustainable livelihoods.
Value Addition
- NITI Aayog’s Report on Multidimensional Poverty: Highlights the need for targeted interventions to address poverty and vulnerability, rather than universal freebies.
- SC Judgement (2022): The Supreme Court has expressed concern over the misuse of public funds for populist measures and called for a balance between welfare and fiscal responsibility.
- Best Practice (Tamil Nadu): Tamil Nadu has a long history of welfare schemes, but also focuses on investments in education and healthcare.
- Quote: “The welfare of the people is the ultimate test of any government.” – John F. Kennedy
The Way Forward
- Immediate Measure: Establish a transparent mechanism for evaluating the fiscal impact of election promises.
- Long-term Reform: Promote a shift towards policies that focus on sustainable economic growth, job creation, and skill development. Strengthen institutions responsible for fiscal management and encourage greater public awareness about the importance of responsible spending.