'Revdi culture is very dangerous for the development of the country', the famous quote echoed in the baritone voice of Prime Minister Narendra Modi in 2022 during the inauguration of the Bundelkhand Expressway. This quote by PM Modi sparked a major debate among political parties and social media. In the same year, AAP National Convenor & Delhi CM Arvind Kejriwal countered PM Modi's jibe on freebies saying, 'Economy isn't affected by giving things for free. But thefts and robbery harm the economy.' AAP which is known for announcing freebies and even delivering them in the form of free electricity and free travel for women in public buses was quick to counter PM Modi's warning on the Revdi Culture. Now, let's return to 2024 when the Lok Sabha Elections fever engulfed the country. Every major political party has released its manifesto and has promised freebies to woo the voters of India.
Below are political parties and a list of freebies they announced in their Lok Sabha Elections 2024 manifesto.
1) AAP's promises for Lok Sabha Elections 2024
2) Freebies announced by BJP in their Lok Sabha manifesto
3) Freebies announced by Congress for Lok Sabha Elections 2024
4) Freebies promised by Trinamool Congress (TMC)
5) Freebies promised by DMK
MK Stalin-led Dravida Munnetra Kazhagam has promised two significant freebies aimed at different demographics.
Top 4 States of India ruled by different parties, freebies they offer & their impact on tax payers
1) Uttar Pradesh
In 2022 when Uttar Pradesh was about to undergo state elections, the Yogi Adityanath government announced a 50 percent cut on farmers' electricity bills for running their tubewells. The Chief Minister's office made the announcement on its official Twitter handle that said the decision to slash the power bills has been taken in the interest of farmers.
Notably, after Yogi Adiyanath retained his power in 2022, a report suggested that the distribution of free ration to poor families has been the biggest factor that ensured the victory of the BJP in the 2022 assembly elections.
Besides, free gas connections under the Ujjwala scheme, free toilets, free houses and promises of free bus rides for women above 60 years and two-wheelers for meritorious college girls under the Rani Laxmi Bai Yojana, proved to be a game changer for the BJP that returned to power with a whopping majority.
But at what cost?
In August 2022, a PIL was filed in the Supreme Court of India (SC) against freebies by the State Government. As per the petition, the Indian states have outstanding liabilities of Rs 59,89,360 crore as of March 31, 2021, and new sources of risk have emerged in the form of rising expenditure on non-merit freebies. The PIL stated that Yogi Adityanath governed Uttar Pradesh Uttar Pradesh tops the chart with liabilities of Rs 6,62,891 crore followed by Maharashtra.
AAP Spokesperson Reena Gupta in 2022 talked about some misinformation regarding the PMGKY by clarifying that while the scheme is now set to cost more money than before, it is still being funded from the money collected from the taxpayers and isn't an act of generosity that the government is attempting to brand it as.
2) Punjab
Aam Aadmi Party (AAP) won the 2022 Punjab State Elections with historic margins. The Aam Aadmi Party (AAP) won 92 of 117 seats in Punjab. The only time a single party has won about these many seats in Punjab since 1977 – the first year when the state elections were held on 117 seats – was in 1992, when Congress won 87.
AAP's win in Punjab was not only because of the continuous Congress, SAD & BJP rule but also their promises and freebies. AAP had promised free electricity in households, free travel for women, and ever Rs 1000 for women.
Free power in Punjab
After coming to power, the Aam Aadmi Party in July 2022 implemented its poll promise of providing 300 units of power free to each consumer every month. Since then it has directly benefited 88% consumers to the tune of Rs 11,500 crore. Almost 90% of Punjab's households have zero electricity bills.
The implementation of free power was obviously suppose to cost the Punjab Government and ultimately the taxpayers. As a result, the Mann government allocated power subsidies accounting for 10% of the total budgetary allocation of Punjab for the financial year (2024-25).
During the budget session it was announced that out of the total outlay of Rs 2.04 lakh crore for the upcoming fiscal, a whopping Rs 20,477 crore will go towards power subsidies in the form of free electricity to farmers and domestic users, and subsidies for industrialists.
As per reports, out of the 38 lakh consumers billed by the Punjab State Power Corporation Limited (PSPCL), 33.5 lakh got zero bill for electricity consumption in February 2024.
Free travel bus for women
AAP's another major poll promise was free travel for women via bus. During the 2024 Budget session, Punjab Finance Minister Harpal Cheema announced that 11 crore women of the State have availed of free bus travel facilities during the current year. Cheema stated that the government has allocated ₹450 crore in FY 2024-25 for continuing this service.
It is pertinent to mention here that the free bus travel for women concept was started by Congress. It was carried forward by the Bhagwant Mann-government later.
Rs 1000 to every women per month coming soon !
During the budget session, Punjab Finance Minister Harpal Singh Cheema informed the Assembly that the state government will fulfil the "guarantee" of giving Rs 1,000 to women per month.
What do the freebies cost to Punjab taxpayers?
A PIL filed in 2022 in the Supreme Court outlined that Punjab has the highest debt to Gross State Domestic Product (GSDP) ratio at 53:3, with a liability of ₹2,49,187 crore. As a result, True Scoop News tried to find out the GSDP of Punjab for the year 2023-24.
In 2023-24, Punjab’s GSDP (at constant prices) is estimated to grow at 6.8%. In comparison, national GDP is estimated to grow at 7.6% in 2023-24. Revenue deficit in 2024-25 is estimated to be 2.89% of GSDP (Rs 23,198 crore), lower than the revised estimate for 2023-24 (3.23% of GSDP). Fiscal deficit for 2024-25 is targeted at 3.8% of GSDP (Rs 30,465 crore), lower than the revised estimate for 2023-24 (4.12% of GSDP).
'Punjab may fall into debt trap'
As per a newswire report published in October 2023, Punjab has accumulated a debt of over Rs 47,000 crore in the past a year and a half, prompting calls from economists to rationalise freebies amid lack of resources to make fresh capital investments as the State’s outstanding debt hovers over 50% of its GDP.
In 2023, Punjab Governor Banwarilal Purohit in a letter to the state government, claimed the debt had risen by Rs 50,000 crore under the AAP dispensation.
"The state’s debt-to-GDP ratio is nearing 50%, which is much higher than the national average. The state’s debt is now at an unsustainable level, and in one year six months, debt increment of about Rs 70,000 crores in two years means that an economic crisis stares at us,” Navjot Sidhu was quoted saying.
In 2024, it is reported that Punjab is slumping into debt. Punjab's debt has been spiraling each year. The state government is estimated to borrow Rs 30,465 crore in the financial year 2024-25 and close the year with an outstanding debt of Rs 3.74 lakh crore as per budgetary estimates (BE) and a debt to gross state domestic product (GSDP) ratio of 46:60%. The GSDP is expected to be Rs 8.02 lakh crore, according to the ‘Budget at a Glance’ document tabled by finance minister Harpal Singh Cheema in the state assembly. In the current fiscal year, the outstanding debt was to climb to Rs 3.47 lakh (BE), but it has been revised to ₹3.43 lakh crore in the revised estimate (RE).
The majority of the borrowings are going into debt servicing – payment of principal and interest and this is indeed worrying.
3) West Bengal
The Trinamool Congress-ruled West Bengal is also not too behind when it comes to freebies. In February 2021, West Bengal CM Mamata Banerjee launched 'Maa Canteens' and allotted Rs 100 crore to the scheme to provide food to the poor at Rs 5. In January, she hiked dearness allowance for West Bengal state government employee by three percent.
In 2019, 'Krishak Bandhu' was launched by the TMC givernment as a counter scheme to the Central Government’s PM-Kisan initiative to help farmers, and covers 1.30 crore farmers in the state. In the 2023 budget, the state government raised the annual amount to be given to Rs 6000 per acre per year from Rs 5000 previously and Rs 2,647.89 has been the expenditure incurred so far under the scheme.
Furthermore, the Mamata government also increased the current minimum assistance to farmers from Rs 2000 to Rs 3000, irrespective of the quantum of land they have. Besides this, elderly farmers also get a monthly pension of Rs 1,000 with around 1 lakh beneficiaries so far (last reported). In the 2021 budget, the West Bengal government had decided to bring all the existing pension schemes under the “Jai Bangla Scheme-2020”.
How it is costing the people of West Bengal?
As per a 2023 report, The Reserve Bank has said that the state governments are making public borrowing, over and above what was announced in the budget, which is a matter of concern. In the year 2020, the Andhra Pradesh government raised huge debt over and above announced in the budget. Apart from Andhra Pradesh, the Reserve Bank has cautioned 9 more states that their borrowings have far exceeded their capacity. Of these, Punjab, Bihar, Kerala, and West Bengal are said to be under extreme stress.
The Reserve Bank report stated that the average government borrowing in Punjab, Andhra Pradesh, West Bengal, Haryana and Kerala is more than 5 percent of their respective state GDP. Government borrowing is 9.6 percent in Punjab and 6.1 and 6.0 per cent in Andhra Pradesh and West Bengal respectively.
As per a report published in November 2023, West Bengal's debt constitutes more than a third of its state GDP, while its tax revenue has often accounted for less than a third of its total annual receipts in recent years.
4) Tamil Nadu
Tamil is among the top states of India that spend the most on subsidies. Dravida Munnetra Kazhagam (DMK) Supremo MK Stalin during the Tamil Nadu state elections campaign had announced they would pay women household heads Rs 1,000 monthly if voted to power. Tamil Nadu CM Stalin has always maintained his stance that the word freebies is not correct. In fact, for this, he also approached the Supreme Court of India. Stalin, his government proposed a welfare scheme and not freebies.
Among the many 'welfare schemes' Stalin outlined that when a girl child is born, the state makes a fixed deposit of Rs 50,000 for her, which she can withdraw when 18. In case the family has two girl children, each gets Rs 25,000. She gets free books, school bags and also a mid-day meal. After passing Class X, she will get a handsome amount from the state, so her parents don’t ask her to stop going to school.
What does it cost for the people of Tamil Nadu?
As per RBI's study. Tamil Nadu spent 5 percent of its GDP on subsidies in 2022-23. As per a report in 2023, Tamil Nadu will fall into a debt trap if the government continues to borrow to pay the old debt without focusing on infrastructure development, attracting real investments in manufacturing, preventing leakage, widening tax base and boosting the investors confidence.
Sriram Seshadri, Founder and Managing Partner was quoted by IANS saying that the DMK government is reckless in giving freebies and subsidies to all and cited the 100 units of free power - by the AIADMK government- to all domestic consumers as one example.
Most of the budgetary allocations are towards revenue expenditure and not much for infrastructure development and the possibility of long-term revenue is not there, he added.
Central Government's freebies and its impact on India's economy
1) Pradhan Mantri Ujjwala Yojana
Pradhan Mantri Ujjwala Yojana was launched by PM Modi on 1 May 2016 to distribute 50 million LPG connections to women of Below Poverty Line (BPL) families. As per reports, a budgetary allocation of Rs 80 billion (US$1.0 billion) was made for the scheme. The scheme was replaced by the Ujjwala Yojana 2.0 in 2021.
In March 2024, Cabinet approved the continuation of the Rs.300 targeted subsidy to PM Ujjwala Yojana Consumers. Under this, a subsidy of Rs.300 per 14.2 kg cylinder (and proportionately pro-rated for 5 kg cylinder) for up to 12 refills per year to be provided to the beneficiaries of Pradhan Mantri Ujjwala Yojana (PMUY) during FY 2024-25. As on 1st March, 2024 there are more than 10.27 crore PMUY beneficiaries.
The total expenditure will be Rs.12,000 crore for the financial year 2024-25. The subsidy is credited directly to bank accounts of the eligible beneficiaries.
Notably, there are multiple welfare schemes that are operational under the name of Pradhan Mantri.
