Author: Tanya bharti, Bharati Vidyapeeth New law college Pune
Abstract:
The rising trend of political parties offering “freebies be it in the form of electricity, water, cash transfers, household goods, or tax waivers has sparked a complex legal and constitutional debate in India. While some view these measures as vital welfare steps aligned with the Directive Principles of State Policy (DPSPs), others criticize them as fiscal populism that compromises economic discipline and the principles of cooperative federalism. This article examines the intersection between electoral freebies and fiscal federalism, highlighting constitutional provisions, judicial interpretations, policy implications, and case law. It argues for a balanced legal framework that upholds social justice while ensuring responsible governance.
To the Point:
The crux of the issue lies in the unregulated use of public funds to distribute goods or services without a long-term financial strategy. Many state governments fund such schemes by borrowing excessively, raising concerns about fiscal irresponsibility, transparency, and fairness. The question is not whether welfare schemes are wrong, but whether all promises labeled as “welfare” qualify as constitutionally valid and financially sustainable
Legal Jargon Explained:
Fiscal Federalism: This refers to the system in which financial powers and responsibilities are divided between different levels of government (Union and State) under the Constitution.
Public Debt: Money that the government borrows to meet expenditures beyond its revenue.
Directive Principles of State Policy (DPSPs): Non-enforceable constitutional guidelines under Articles 36-51 that direct the state to ensure social and economic welfare.
Populism: Political strategies aimed at gaining support by appealing to the general public, often by offering short-term benefits.
Redistributive Justice: The policy of distributing wealth or resources to reduce inequalities in society.
Appropriation Bill: A bill passed by the legislature that authorizes the government to draw money from the Consolidated Fund to meet expenditures.
Model Code of Conduct: Guidelines issued by the Election Commission to regulate the conduct of political parties during elections.
Constitutional and Legal Framework
Fiscal Federalism under the Indian Constitution
India’s Constitution lays down a structured division of financial powers. The Seventh Scheduleclassifies these powers into three lists:
Union List Includes taxes and duties that the Centre alone can levy (like income tax, customs, and excise).
State List: Grants states the authority to levy taxes like land revenue, and state excise.
Concurrent List: Both the Centre and States can legislate, like on education and forests.
Articles 268 to 293 address the allocation of tax revenues and borrowing powers between the Centre and the States. Article 280 provides for the establishment of the Finance Commission which recommends how taxes should be shared between the Union and States.
States are expected to maintain fiscal discipline, and under Article 293(3) a State cannot borrow beyond a limit without the Centre’s consent if it is already indebted to the Union.
The Problem: Freebies and Fiscal Indiscipline
1. Unplanned Fiscal Burden
When a State promises extensive freebies like free electricity, cash handouts, or laptops, these are often not planned in the budget. For instance, in Punjab, the announcement of free electricity to all households led to a large fiscal deficit and increased state borrowing. Without corresponding revenue sources, these schemes push the state toward long-term debt traps, affecting the ability to invest in core infrastructure.
2. Impact on Productive Expenditure
Money spent on freebies reduces the funds available for developmental and capital expenditure like roads, health care, education, and irrigation. This leads to what economists call “crowding out”— welfare expenditures consume most of the budget, leaving little room for investment in long-term public goods.
3. Distortion of Competitive Federalism
While competition among states is healthy in a federal system, the “race to the bottom”caused by exaggerated promises harms all players. When one state offers excessive freebies, others feel pressured to follow, even if it strains their finances. This distorts the idea of competitive federalism, where states should ideally compete in governance, not populism.
4. Lack of Accountability
Many freebie schemes bypass proper legislative scrutiny and do not undergo cost-benefit analysesor social audits. If not passed through proper Appropriation Bills or Demand for Grants, it may even violate Article 266(3)which requires that public money must only be spent through laws passed by the legislature.
5. Creating a Dependency Culture
Freebies may create a sense of dependency and diminish self-reliance among citizens, particularly if not tied to productivity. The aim of welfare should be empowerment, not sustained dependence.
Landmark Case Laws:
1. Subramaniam Balaji v. State of Tamil Nadu (2013)
Citation: (2013) 9 SCC 659
FactsThe Tamil Nadu government provided TVs, grinders, and laptops through state funds as part of electoral promises. The petitioner claimed it was a misuse of taxpayer money.
Judgment: The Supreme Court held that these schemes, if aimed at the socio-economic upliftment of the poor, cannot be termed illegal. However, the Court urged the Election Commissionto draft guidelines to regulate such practices.
Impact Though not struck down, the judgment opened the door for regulatory mechanisms to address the issue.
Ashwini Kumar Upadhyay v. Union of India (PIL Pending, 2022)
A PIL was filed challenging the constitutionality of irrational freebies, claiming they distort free and fair elections and misuse public funds.
The petitioner argued that unchecked freebies violate Article 14(equality), Article 21 (right to life), and Article 266 (regarding public expenditure).
The matter is under consideration and may set important precedents.
Election Commission Guidelines (2023 Draft in response to SC)
The ECI has released draft guidelines asking parties to specify how they will fund freebies promised in manifestos.
These guidelines are not yet enforceable laws but aim to increase transparency and accountability
Role of Institutions
A. Election Commission of India (ECI)
The ECI can regulate the content of manifestos under the Model Code of Conduct, but lacks legal power to ban freebies altogether. The SC in Balaji’s case urged the ECI to create more binding rules, but progress remains slow.
B. Finance Commission
It can condition grants to States based on performance, including fiscal discipline. If a State over-indulges in freebies, the Finance Commission may reduce its share in devolution or tag it under conditional support.
C. Comptroller and Auditor General (CAG)
The CAG audits public expenditure. If it finds that the freebie schemes were not duly passed by legislative processes or that there is financial mismanagement, it can raise objections and even recommend recovery or reform.
Counterpoint: Freebies as a Welfare Tool
Despite criticisms, many argue that freebies are not inherently bad:
Part of Social Justice: Free education, healthcare, or minimum income schemes are tools to reduce inequality and fulfill DPSPs under Articles 38, 39, 41, and 46.
Corrective Redistribution: In a highly unequal society, targeted welfare schemes (even if labeled as freebies) help bridge the development gap.
Empowering the Poo: Schemes like PM Awas Yojana, Mahatma Gandhi Rural Employment Guarantee Act (MGNREGA), and free midday meals are often called freebies but serve a strong redistributive and welfare function.
Hence, the key distinction is not whether a scheme is free, but whether it is **targeted, planned.
Conclusion:
Freebies in electoral politics represent both the aspirations of a welfare state and the dangers of fiscal irresponsibility. While social welfare is a constitutional obligation under the Directive Principles, the misuse of public funds without due process or fiscal backing can threaten India’s constitutional federalism and democratic accountability. A legal framework that mandates disclosure, impact assessment, legislative scrutiny, and fiscal evaluation of such promises is necessary. Voters must also become more aware and demand that their governments spend wisely, not just generously.
FAQS
Q1. Are all freebies illegal?
No.Freebies aimed at poverty alleviation, education, and healthcare are constitutional if funded properly and legislated by the State.
Q2. Can the Election Commission ban freebies?
Not directly. It can issue guidelines under the Model Code of Conduct, but these are advisory. A law passed by Parliament would be needed to fully regulate freebies.
Q3. Why do freebies impact federalism?
They disrupt fiscal balance and force other States into a competition of promises, undermining the spirit of competitive federalism and cooperation.
Q4. Is there any case pending on freebies in the Supreme Court?
Yes. A Public Interest Litigation (PIL) filed in 2022 by Ashwini Upadhyay seeks regulation or a ban on irrational freebies. The Supreme Court has referred the matter to a larger bench.
Q5. What is the role of the Finance Commission in this issue?
The Finance Commission can reduce or adjust grants to States based on their fiscal behavior, which could include excessive borrowing for populist schemes.
