Are freebies affecting the economic growth of India?
Freebies are objects or services that are provided without any charge. They include free electricity, water supply, laptops, mobile phones, gold ornaments, free bus passes etc. Freebies are given mostly to secure votes of public.
Pros
- Essential for fulfilling expectations
Some poor families have large expectations but unable to fulfill due to lack of finance. In such case, freebies help in fulfilling expectations.
- Achieve welfare state
The idea of welfare state is to look after the interests of the people. Subsidies and freebies aim at achieving welfare of the society.
- Economic push
By reducing spending on electricity bills, water bills or transportation, the government hopes that families spend their income productively to help economy.
- Reducing inequality
In unequal society such as India, government support ensures that poorer groups can compete with the richer. Freebies help in removing some of the barriers.
Cons
- Fall in productivity
Free products and services reduce the need for working. People become over-dependent on government support, affecting productivity of workforce.
- Fiscal stress
Governments will have to allocate huge funds to finance freebies. The fiscal position of the government will be affected and it will be forced to borrow.
- Discourages honest taxpayer
Honest taxpayers will be discouraged to provide their contribution to the government as the money is used for populist political agenda.
- Undermines spirit of democracy
One of the bedrock of democracy is free and fair elections. Using freebies to entice voters will amount to malpractice and is against the spirit of democracy.
Way ahead
Freebies can be provided if it is sustainable and affordable. The states with sound fiscal status can indulge in providing freebies to certain sections. Thus, it is necessary that all sections of people are accommodated in developmental plan of the country. Subsidies or freebies can help in reducing the inequalities present.
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