Of revdis, freebies and other things

How a government handles the overall economy at the national or state level decides both its spending power on such schemes as well as the demand for such schemes. 

Published: 01st September 2022 07:06 AM  |   Last Updated: 01st September 2022 07:26 AM   |  A+A-

Illustration: Soumyadip Sinha

The “Freebie” debate or “revdi” culture as the PM termed it—is unlikely to die soon. Even though the Supreme Court has admitted that pronouncing a verdict on the freebie issue is not something it is equipped to do, it has suggested a court-appointed committee to study it. It is unclear how a committee can decide on a highly complex issue with far too many dimensions.

Freebie is not an accurate term anyway. Things are rarely given away for free with no strings attached. In business, freebies are mostly incentives to either get a first-time buyer to sample the product or service, or to get a consumer of another brand to switch loyalties. A lot of thought and expertise goes into designing these freebies/incentives.

In policymaking, the difference between a freebie/revdi and a welfare program or social security scheme is often blurred. The difference often depends on many issues such as how well the scheme is designed, 
what the short- and long-term expectations are, how many people it covers and multiple other things.

When the UPA first introduced the MGNREGA or the rural job guarantee scheme, it was derided by its opponents as a cynical attempt to get votes from the rural poor, given that the government had failed to boost the economy and create enough opportunities. Prime Minister Narendra Modi mocked it in Parliament and called it a “living monument of UPA’s failures”. Yet, his government had to sharply increase allocations each time there was rural distress or general economic downturn. Now, there is a debate about whether an urban job guarantee scheme, somewhat similar to the MGNREGA, needs to be designed.

The free midday meal scheme helped improve attendance and reduce dropouts, especially of poor children. In many cases, it provided the nutrition that the children would have lacked otherwise.
Take the cycles given to the girl child by several state governments. Evidence is emerging that they have helped girls attend educational institutions too far to walk to and have thus improved their chances of finishing a graduate degree. Free grains given by the government to 80 crore people during the pandemic no doubt helped in preventing many starvation deaths. And the PM’s LPG scheme could be seen as an incentive to shift to a cleaner form of cooking fuel—though how successful it was is a different debate.

The difference between a vote-catching freebie and social security scheme or a programme designed for long-term improvement of some social parameters would depend on multiple things. Apart from how well the scheme is planned, designed and executed, the output and the outcome of those schemes both in the short- and the long-term are pivotal as well. If any scheme or programme does not have a clear outcome in mind while being designed, it can be termed as a vote-catching freebie—though one should not be hasty to judge such schemes without measuring their outcome in terms of changing lives.

It is really the programme design, execution and long-term tracking and measurement of outcomes that should be the goal of any party or government at the state or Union level, when it announces and rolls out a subsidy scheme. This is where major improvements are required—and in India, both bureaucrats and politicians fail. Rigorously measuring outcome and tracking execution is hardly our strength.
The other part of the debate—and what the Supreme Court raised—is the economic consequences and costs to the state exchequer. And that is a far simpler matter to judge. How a government handles the overall economy at the national or state level decides both its spending power on such schemes 
as well as the demand for such schemes. 

There are some essentials that the governments at all levels need to spend on for long-term good—education, health, sanitation, etc., are things which should never be seen as freebies because they have a long-term impact on the nation’s progress.

The ability to spend on other programmes and schemes typically depends on the state’s ability to raise revenues, its fiscal deficit, debt, etc. These days, there is a fair amount of monitoring of fiscal deficit and debt of governments and clearly laid-out ceilings that should not be breached. Equally, a government which manages its economy well which in turn generates more jobs and higher incomes for its citizens finds itself in a happy spot to spend less on many programmes, whatever term freebie, incentive or welfare programme you may use for them. When the rural economy is doing well, the demand for MGNREGA jobs also falls.

There are no perfect or even right answers to the debate. There are good ways to ensure that freebies are not necessarily eating up resources better spent somewhere else. This is through programme planning, design, execution and outcome-tracking. Equally, ensuring that governments stick to fiscal deficit and debt goals can help ensure that profligate spending is avoided. 

But the best solution is still something that most governments fail to think of if they manage the overall economy well and create higher prosperity and better living conditions for citizens, the debate becomes redundant.

Former Editor, Business Today and Businessworld magazines 


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