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FREEBIE SCHEME – A STEP TOWARD FINANCIAL EMERGENCY

Introduction

In the recent matter of Ashwini Kumar Upadhyay v. Union of India[1] (“Freebie scheme Case”), the Supreme Court of India addressed the word ‘Freebie’, although the term had been used even before it. In this case, a petition challenging the practice of Political Parties to promise “irrational freebie schemes” to voters, if elected to power was raised. The Supreme court has addressed the complexity of the ‘freebie scheme’ in this case and mentioned that there is a need to draw a line between welfare schemes and other promises that are made by Political Parties before an election. Freebie schemes are not any goods themselves; it is in form of goods, schemes, and monies. If a person gives something to another person without paying for it, for other person’s support for or interest in something. It is different from any welfare schemes, and subsidies. The term Freebie means, obtaining or receiving something without any cost or pay. Freebie schemes are differentiated from any welfare and social schemes given to civil citizens. Freebie schemes are a non-essential culture, due to their overstressed debt on states randomly increasing.

The legality of freebie schemes under Constitutional law and other laws

 A Petition challenging the Freebie schemes in the matter of Ashwini Kumar Upadhyay[2], the question raised in this matter relates to promises made by Political Parties for the distribution of free goods (‘Freebie schemes’) as a part of their election manifesto or during the election speeches. In another case of S. Subramaniam Balaji v. Govt of Tamil Nādu & Ors[3], the Political Parties Dravida Munnetra Kazhagam (DMK), while releasing the election manifesto for the Assembly Election, 2006, announced a scheme of free distribution of color TV sets (CTVs) to each household which did not possess the same, if the said party/its alliance were elected to power. The Freebie scheme is a “serious issue” because it is giving only overstressed debt to the states, it creates a huge barrier to economic development for states. Freebie schemes violated several provisions of the Constitution, the Representation of People Act, and other laws. Distributing private goods and services, which are not for public purposes from public funds, clearly violates A. 162, 266(3), and 282 of the Indian Constitution. According to A. 324 of the Constitution of India, the Election Commission holds free and fair elections.[4] According to S. 123 of the Representation of People Act, 1951 corrupt practices are prohibited for those candidates who want to win an election by giving unwanted benefits to voters. The freebie schemes violate also S. 123 of the Representation of People Act, 1951, as per this S. Bribery is deemed to be a corrupt practice. S. 123(1)(A) gives the definition of “Bribery”, that is to say – any gift, offer, or promise by a candidate or his agent or by any other person with the consent of a candidate or his election agent of any gratification, to any person whomsoever, with the object, directly or indirectly of inducing….[5]  Freebie schemes should be deemed to be bribery because a contesting party gives gifts, offers, or goods to voters without any cost. The Model Code of Conduct (MCC) for the Election Commission directs, all parties and candidates shall avoid scrupulously all activities which are “corrupt practices” and offenses under the election law, such as bribing of voters, intimidation of voters, impersonation of voters, canvassing within 100 meters of polling stations, holding public meetings during the period of 48 hours ending with the hour fixed for the close of the poll, and the transport and conveyance of voters to and from the polling station.[6] Each taxpayer pays their tax to the Consolidated fund for infrastructure not for distributing goods and gifts. Freebie schemes also violate each taxpayer’s rights and come only from taxpayers’ money. It’s not private spending it’s for public welfare and health. Freebie schemes are not only a serious issue it also illegal, unfair, and unconstitutional. Such offers of cash transfer/freebie scheme schemes by Political Parties in election manifestos/rallies/speeches corrupt electoral practice and ultra vires in the Constitution of India. 

Impact of freebie schemes on the Indian Economy

Freebie schemes usually include goods like bicycles, smartphones, TVs, laptops, and waivers on bills (water, electricity, etc.). Such pre-election promises, which have a large-scale impact on the economy of the state, cannot be permitted. Such pre-election promises are being made by Political Parties without any assessment of the financial implications. India is a developing country due to which its Economy cannot remain stable. Freebie schemes impose a burden on the state’s financial status contributing to huge fiscal debt. According to the Reserve Bank of India (RBI), in end-march 2022, India’s external debt was placed at US$ 620.7 billion.[7] It is a very large debt for any developing country like India. Freebie Schemes will create a huge problem, with the biggest damage happening to the power sector. Emphasizing that freebie schemes by Political Parties were leading to an economic disaster and distorting voters’ decision-making. The culture of freebie schemes in Tamil Nādu state was started during the 1967 assembly. The then DMK chief minister C.N. Annadurai offered scheme to provide 4.5kg of rice at Rs. 1.[8] In India, when it comes to freebie scheme expenditure, states like Kerala, Tamil Nādu, Punjab, Rajasthan, and West Bengal spend around 90% on revenue accounts.[9]

Declaration of financial emergency 

Surprisingly, an Emergency Provision under Art. 360 of the Constitution of India has never been used. According to Art. 360 of the Constitution, “If the President is satisfied that a situation has arisen whereby the Financial stability or credit of India or of any part of the territory thereof is threatened, he may be a proclamation make a declaration to that effect.”[10] It means if India’s economy is not stable, a financial emergency may be used. Freebie schemes directly or indirectly affect the economy of India and its state also. Some other country has huge debt due to a lack of revenue, which are Egypt, Sri Lanka, etc. Sometimes states are responsible for their own revenue loss, this situation arises in form of a financial emergency. Due to the instability of the economy, lack of funding, the burden of debts, no revenue, off-budgeting expenses, non-discretionary expenditure, etc. attract a Financial Emergency in India. It is therefore important to ensure that the prospectus of a financial emergency in case of gross and continuing fiscal irresponsibility is not just an abstract threat but a realistic one. 

Is the Freebie scheme a welfare scheme?

Welfare schemes are for the public their basic needs and requirements. It is the responsibility of each state, mentioned in the Directive principle of State under the Constitution. Welfare schemes are fundamental, legal, and constitutional. Whereas a freebie scheme is a not basic need and requirement of the public. It’s not a Directive Principle of State Policy and not a responsibility of states also. The Welfare schemes are given to the poor and helpless public, whereas the Freebie Scheme is for those people who are not beneficiaries. The Freebie scheme is non-essential, whereas the welfare scheme is an essential and basic need for the public. Due to the Freebie scheme economy loses money so its impacts public welfare. Freebie schemes are providing free of cost services and goods to people, whereas welfare schemes ask people to do something for services. Providing color TV sets without cost is Freebie Scheme, but providing tablets for students without paying is a welfare scheme.

Conclusion

Freebie schemes are not intended to ensure social and economic justice termed. Freebie schemes and their culture make people lazy, have a poor standard of education, and vitiate the purity of elections. Freebie schemes by Political Parties will lead to economic disasters. Freebie schemes offered by political party viewed as a “corrupt practice”. What matter is not whose hands spend the money, but the essence of the matter is whose money it is. Alluring voters on the promise of instant gratification in the form of cash without exchange for any labor/work is illegal and subverts free and fair elections. The people should decide which party wins. The people should decide which party will win and which party will come to power again.  The time has come to initiate a well-rounded discussion on the economic causes and consequences of freebie schemes and their separation from essential welfare schemes. We should remember and learn from it that Economic Crisis in like Sri Lanka should not come to India. Freebie schemes are a huge barrier to the economic growth of the country and states also, consequently financial emergencies can arise. The Freebie scheme is not even good for the economy and welfare of the state, it’s the only crisis in financial needs in India. Freebie culture should not promote in India.

Author(s) Name: Bharat Kumar (Madhav University, Pindwara, Dist. Sirohi, Rajasthan)

References:

[1] Ashwini Kumar Upadhyay v. Union of India & Anr, 2022 Writ Petitions (Civil) No. 43 of 2022.

[2] Id.

[3] S. Subramaniam Balaji v. State of Tamil Nadu, (2013) 9 SCC 659.

[4] Ashwini Kumar Upadhyay v. Union of India & Anr, 2022 Writ Petitions (Civil) No. 43 of 2022.

[5] Representation of People Act, 1951, § 123(1)(A), No. 43, Acts of Parliament, 1951 (India).

[6] Election Commission of India, https://eci.gov.in/mcc/ (last visited October 8, 2022).

[7] Reserve Bank of India, India’s External Debt as at the end of March 2022, (2022), https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR4506F43273F1F6F473F9C67F0ACF8FEDF94.PDF.

[8] KN Arun, First define a freebie, INDIAN EXPRESS (Aug. 24, 2013, 3:10 AM),

https://indianexpress.com/article/opinion/columns/first-define-a-freebie/.

[9] Explained: What are ‘freebies’ and how they may burden state, THE TIMES OF INDIA, Aug. 03, 2022, 03:25 PM), https://timesofindia.indiatimes.com/business/india-business/explained-what-are-freebies-and-how-they-may-burden-state-finances/articleshow/93306455.cms.

[10] INDIA CONST. art. 360, § 1.