Is there merit in this argument that freebies will end up hurting the economy?
Well the first question is how do you define freebies and what are we talking about? There are a large number of expenditures that the government makes without charging people and as I said the Prime Minister referred to something called rewaris meaning these are things that are just being given away to some people without merit and if you spend too much money on rewaris, there is not enough left for good causes.
On the other hand there are various other things that are free which I would call jalebis which we need. We need high quality education free of charge in the villages. We need high quality primary health. We need high quality public health, preventive health which prevents diseases. So there are a large number of jalebis along with the rewaris. Now what is true is that there are some expenditures which I am dead against.
For instance, if you are giving free electricity to farmers, this is a terrible thing. It is resulting in certain bankruptcy of the Punjab Government. It has been a serious problem. It means that we are over pumping, we are growing the wrong kind of water intensive crops instead of the appropriate crops, a series of wrong things. So free electricity is a bad thing.
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Again, supplying highly subsidised urea at one-third the world price is bad and results in farmers using too much of urea and not enough of the others and this spoils the soil. On top of that, a lot of this highly subsidised urea is being smuggled across into Bangladesh and Nepal or being diverted to chemical industries. So these are the really bad freebies that we should not have.
There are some other freebies like PM Kisan schemes. Should you be giving money to all farmers? I would say no. What is special about farmers? If you like, give it to everybody. I mean if you see what Mr Naveen Patnaik has done in Odisha, he has said in rural areas it will go to all people, whether they are farmers, tenants, landless labour and other kinds of people. So give it to all if you have to give it at all. If you only give it to farmers, that I would call a freebie and that is unwarranted.
But broadly speaking, in every democracy there are powerful lobbies who demand favours and they get those favours because politicians want to cater to those vote banks. That I am afraid is a fundamental flaw in democracies and this is why the former president of the European commission, Jean-Claude Juncker, made this famous statement, “We all know what is to be done, what we do not know is how to get re-elected after doing it.” And because they do not know how to get re-elected after doing it, they continue with the freebies that are not good in the long run.
You talked about rewari and jalebi, is it the Supreme Court, the election commission or political parties who decide what is the jalebi and what is the rewari?
Let us face it, this is fairly and squarely something in the political arena to be decided by political parties and voters. This is not a thing for the judiciary to get into. It is not a thing for the Election Commission. It is not a thing for some committee of technocrats. All those people can have their views on the matter but ultimately this is about the fundamental functioning of the government, of how we raise money, whom do we tax, whom do we subsidise or help in various ways.
So this has to be done through the political system, through politics, through convincing voters that we need to do this, we cannot do that. Within this, some things will happen that are very good, money will flow to things that are good and appropriate. Within this also, unfortunately some money will go to favoured lobbies and those favoured lobbies do not always deserve what they are getting like the farmers of the northwest getting various benefits through MSP which is not available to farmers in the rest of India. That clearly is a favour to one group of people and that is a rewari. But at the end of it all, this cannot be resolved by some committee. It has to be done in the political arena, the political parties have to vie with each other and convince the voters which is appropriate taking into account short term and long run consequences.