freebie culture is not a road to prosperity

• In a recent address, PM shared his anguish on freebies culture.

Freebies and their impact

• Freebies are given without having to pay for them, especially as a way of attracting support.
• A report of RBI on states’ finances highlighted condition of states’ finances and enhanced debt stress due to flawed policies.

Factors to consider while devising welfare policies

1. Quest for sustainable development

• Growth should be geared towards intergenerational equity and to exponentially increase development.

2. Challenges in providing basic facilities

• Government address inequity by ensuring access to a wide range of basic facilities.
• Removing this inequity to access helps boost the productivity of our population.

3. Issue of access

• Benefits under various welfare schemes have eliminated upfront cost of access.
• It has led to irreversible empowerment and self-reliance.

4. Use of technology in DBT

• Identification of beneficiaries through SECC and prioritisation based on deprivation criteria has enabled government to assist those who need it the most.
• Using shortcut of universal subsidies or freebies often ignore poor and transferring public resources to affluent.

5. Expenditure prioritisation

• Expenditure is distorted away from growth-enhancing items, leading to intergenerational inequity.
• Investors look to macro stability in terms of sustainable levels of debt and fiscal deficit.

6. Impact on future of manufacturing and employment

• Conisder debilitating effect of freebies on future of manufacturing and employment.
• Freebies lower the quality and competitiveness of the manufacturing sector by detracting from efficient and competitive infrastructure.
• They honda growth and, therefore, gainful employment because there is no substitute for growth if we wish to increase employment.

Conclusion

• The poor state finance position should serve as a timely reminder to those promising fiscally imprudent and unsustainable subsidies.