Manish Kumar
Recently, the Bihar government announced free electricity for household consumption of up to 125 units per month. This move has once again reignited the debate around the so-called ‘freebie culture’. In this case, the scheme is expected to benefit approximately 1.67 crore households, with an estimated annual cost of around Rs18,000 crore. However, this is only one way of looking at the scheme—a rather narrow and simplistic perspective. In virtually every state, as well as at the Centre, political parties across the spectrum have, at various times, introduced welfare schemes that have subsequently been criticised by their opponents as irresponsible ‘freebies’. Ironically, most parties have themselves adopted similar strategies when in power. Unfortunately, rather than being assessed through a serious economic lens, such schemes have largely become instruments of political opportunism.
In April 2022, a publication by the SBI and subsequently an article in the RBI Bulletin in June 2022 listed a range of government schemes and labelled them as ‘freebies’, without offering any substantive or qualitative justification for such classification. Neither publication tried to evaluate the nature, effectiveness or social impact of the schemes. The arguments were based solely on concerns about fiscal constraints instead of proposing ways to enhance revenue generation. This approach reflects a narrow fiscal lens and fails to recognise the broader economic and social objectives of such programmes. A serious engagement with the issue would be a comprehensive economic evaluation, focusing not just on cost but also on potential benefits to society at large. There exists a substantial number of studies underlining the complementarities between government expenditure or subsidies aimed at supporting mass consumption. These studies highlight that investments in public welfare can promote economic activities and lead to inclusive growth. Unfortunately, schemes aimed at supporting mass consumption or empowering the working poor are frequently dismissed as ‘freebies’. Whereas, far more substantial forms of support extended to affluent sections of society often escape similar criticism. This is nothing but a clear bias in the prevailing discourse.
It is worth mentioning that numerous impact evaluations have highlighted the positive outcomes of welfare schemes that are generally branded as freebies. For instance, governments’ social sector spending has been shown to meaningfully enhance human development indicators. Consider the example of the Bihar government’s bicycle distribution scheme for school-going girls. While some critics view this as a freebie, rigorous studies reveal its transformative impact. One such study found that the programme increased enrolment of girls in secondary schools by 32 per cent, and reduced the gender gap in enrolment by 40 per cent. The impact was particularly noticeable in villages located farther from secondary schools, indicating that the scheme effectively addressed barriers related to time and safety in accessing education. Another remarkable study proved that girls who received bicycles under the scheme were 27.5 per cent more likely to complete class 10 than those who did not receive the benefit of the scheme. Similarly, the distribution of laptops to students in Uttar Pradesh has been shown to be particularly beneficial for economically disadvantaged groups. The students of such groups would otherwise lack access to digital learning tools. These initiatives have had extensive effects on educational access and digital inclusion.
One may note that these are just a few examples of schemes that are often hurriedly criticised and dismissed as ‘freebies’, and that too without any clear classification or rigorous evaluation. In many instances, the criticism seems to reflect not a genuine concern about the schemes, but a deeper resistance to government expenditure directed towards the common people. However, both economic theory and empirical evidence have long established that government spending can have a significant multiplier effect on income growth and overall development of the economy. Despite this, the expansion of state intervention in pursuit of social and economic democracy continues to face fierce opposition from a certain section. This resistance is not merely fiscal in nature but it also results from the transformative impact such interventions can have on the general mass of working people—the governments’ expenditure on social sector can enhance the quality of the workforce, empower marginalised groups, and thereby strengthen their bargaining power within the economy.
Consider the current case of electricity subsidies announced by the Bihar government. Similar schemes in other states, such as Delhi, were previously criticised on the grounds that providing free electricity would encourage wasteful consumption. However, data from Delhi over a four-year period following the implementation of the scheme does not support such claims. The average annual electricity consumption per domestic consumer in Delhi during the four years prior to the scheme was 3,072 units. In the four years after its implementation, the average was slightly lower (3035 units), indicating no significant increase in consumption and certainly no evidence of excessive or wasteful use.
The broader issue surrounding welfare schemes, however, lies in the nature of the political discourse. When one party or government announces such initiatives, they are often met with strong criticism from opposition parties. Yet, when elections approach, these very critics tend to announce similar schemes themselves. This cycle of opportunistic pattern reduces serious welfare policies to mere political tools. As a result, such programmes risk losing public credibility, not because of their design or impact, but due to the inconsistency and hypocrisy in the political narratives surrounding them.
The writer teaches at the Delhi School of Economics.