Ever since Prime Minister Narendra Modi warned against the dangers of ‘revdi culture’ of freebies, there has been a spate of debates over freebies in various forums. Even the Supreme Court recommended an expert committee to find a solution for freebies, while Solicitor General Tushar Mehta lamented that freebies were an ‘economic disaster’ and ‘distorts voter’s decision making.
The economic rationale and fiscal consequences of freebies acquired significance after an RBI report that linked the precarious condition of state finances to freebies was published in June. However, what the ongoing debate misses is that India never had a predefined welfare architecture. Whatever welfare policies that came in and improved the wellbeing of people were outcomes of democratic impulse largely at state level.
The main critique of freebies is that it crowds out public investment meant for productive purposes. Popular schemes, derogatorily referred to as ‘freebies,’ are seen to reduce expenditure on ‘productive’ investments that may have helped generate more jobs and a perception is sought to be created that India wallows in poverty and inequality because its limited public resources are wasted on freebies.
How true are these claims? This culture of freebies began in electoral politics at the State level. The Indian Constitution hasn’t clearly laid out the pattern of welfare that India should adopt, assigning its positive rights — social and economic development, education, and social uplift — to the Directive Principles of the Constitution, making them not enforceable.
Since the welfare architect, its size and shape was left to the imagination of rulers, successive state governments filled it with social content. Since State level expenditure mattered in securing better socio-economic outcomes, regional parties took the lead in devising schemes to provide subsidised food, clothes, housing, healthcare, and other amenities to the poor.
Over time, these schemes were derogatorily called freebies and dole outs and vilified by the urban elite. Though they were legitimate demands of popular mobilisation, echoing people’s aspirations, the elites termed them as ‘vote buying’ tactics and made it a subject of serious discussion in political science literature. The narrative, however, stands in sharp contrast to the evidence that suggests that voters make choices that go beyond freebies.
Economic rationale
The culture of freebies is actually an outcome of lack of economic transformation – paucity of decent jobs in India. It is a response to economic failure, arising out of India’s industrial stagnation, particularly in creating jobs. India could not generate a pattern of growth that produces jobs and inclusive development like most of the East Asian countries, besides having other structural flaws in broad based industrialisation. Even states like Tamil Nadu, Gujarat and Maharashtra that boast of vibrant manufacturing climates couldn’t create enough decent jobs.
Many jobs are created in the largely informal sector that lacks basic economic and social securities. Besides, the inherited inequalities in India, including caste-based discrimination, get reproduced in the job market. Even access to education has not resulted in the marginalised sections securing decent jobs as the disparity in quality of education has a direct bearing on labour market inequities. Freebies and populist schemes compensate for this economic failure and income inequalities.
Tamil Nadu story
A slice of Tamil Nadu’s tryst with freebies may help understand the need for governmental support to the marginalised sections of society. Apart from the nutritious noon meal scheme, a forerunner to similar schemes at the all-India level, a slew of other popular schemes for specific social groups have enabled alleviation of poverty and reduced inequality. Even its PDS has helped reduce poverty – about 44% of reduction is attributed to the PDS. Thus welfare interventions such as universal PDS and mid-day meals for school children have ensured a higher reserve wage for non-formal labour in the state. Even in the health sector, a slew of schemes contributed to improving the age at marriage and the educational attainment of girls.
Tamil Nadu has experimented with schemes that support right-based interventions and also those that fall under the freebies category. If the former is located within a narrative of social justice, the latter is tied to the electoral cycle. But we don’t have evidence of freebies alone buying votes. All that can be stated is that in a situation of job insecurity and economic vulnerability, freebies have a redistributive role.
Footnote is a weekly column that discusses the world from Tamil Nadu’s perspective
Alleviation of poverty
Apart from the nutritious noon meal scheme, a forerunner to similar schemes across India, a slew of other popular schemes for specific social groups have enabled alleviation of poverty and reduced inequality. Even TN’s PDS has helped reduce poverty – about 44% of reduction is attributed to the PDS
Kalaiyarasan A is an Assistant Professor at the Madras Institute of Development Studies (MIDS), India, and a Research Affiliate at South Asia Institute, Harvard University