Why the Supreme Court's caution on freebies demands the attention of India’s political class

Under India’s Constitution, all three arms of the state—the legislature, executive and judiciary—are required and expected to maintain a delicate balance without stepping on each other’s turf.

However, a closer look at the object lesson delivered by the apex court to our political class on the long-term cost of such fiscal irresponsibility offers no reason to level that charge.

The SC was only voicing what many observers have said before. That the seemingly endless freebies announced by governments at both the Union and state levels with no heed paid to who can or cannot pay amounts to “appeasement.” And if this trend continues, it will “only hamper the country’s development.”

The three-judge bench presided over by Chief Justice of India (CJI) Surya Kant was hearing a writ petition filed by Tamil Nadu Power Distribution Corp Ltd that challenges Rule 23 of the Electricity Amendment Rules of 2024.

This rule provides that power tariffs must be cost-reflective and there should be no gap between the approved annual revenue requirement and the estimated annual revenue from the approved tariff, except in situations of natural calamity.

Issuing notice to the Centre, the CJI drew attention to free power distribution by state governments. Though his remarks were made in the context of Tamil Nadu, the CJI clarified that he was speaking about the freebie culture that seems to have overtaken India, especially on the eve of elections.

“What kind of culture are we developing?” asked CJI Surya Kant. “Without drawing any distinction between those who can afford and those who cannot afford, if you start giving, will it not amount to a kind of an appeasing policy?” It is a query that all political parties must answer; and citizens must hold them answerable to. After all, as the CJI put it, “Is it in the public interest that… the state is absorbing all these?”

The CJI is only the latest to voice concern. The 16th Finance Commission report talks of a “vibrant ‘freebies’ debate” triggered by “the recent proliferation of subsidies alongside tight fiscal constraints” adding an “additional element of urgency to concerns of fiscal sustainability.”

To the extent direct benefit transfers (DBTs) ensure state largesse goes straight to intended beneficiaries, they are a vast improvement over an earlier leaky system that saw just a trickle of the outlay reach the needy.

A vast security web in the form of a basic income, or some essential services offered freely to all, could also be well-deliberated policy calls.

But the same cannot be said of freebie showers that accompany poll campaign trails. We can only guess how exactly they impact electoral choices, but they clearly come at the cost of fiscal prudence.

The 2024 poll results in Maharashtra and Jharkhand are surmised to have been influenced by freebie schemes, as also last year’s Bihar polls, whose freebie bill was estimated to exceed ₹30,000 crore.

With elections scheduled in four states this year—Assam, Kerala, Tamil Nadu and West Bengal—we might see political parties of all hues go down the same path.

No wonder the CJI concluded, “Sometimes we are really disturbed.” It is now over to our political parties to become more fiscally responsible. And not disturb the country’s justices unduly.