Don’t let freebies be a crutch

Take the Delhi government over the last few years, it has made a string of announcements, doling out subsidies that also saw its revenue surplus shrink from over Rs 10,000 crore in 2010-11 to a little over Rs 1,000 crore in 2021-22 – a nearly 88% decline. During the same period, the Delhi government also saw its dependence on grants-in-aid from the Centre go up by 122%. In the absence of GoI’s grants-in-aid, its surplus would have vanished, resulting in a Rs 2,000 crore deficit.

As per budgetary projections for 2022-23, Delhi will see its surplus further vanish with a Rs 3,000 crore deficit. The fiscally irresponsible policies of this government have also seen a 39% increase in debt over the last 10 years and increased borrowings from the Centre to the tune of Rs 4,700 crore.

The stunning metrics are on the poor use of grants-in-aid meant for developing capital assets, even as the state is driving up expenditure on subsidies. On top of that, nearly Rs 805 crore has been spent on advertisements over a four-year period, up some 44 times from a paltry Rs 11 crore in 2012-13 to Rs 488 crore in 2021-22. Expenditure on subsidies went up 92% between 2015 and 2020, while salaries of legislators and ministers were hiked by 66-100%. This means it is barely investing in hard infrastructure.

The Delhi government, of course, is not alone in such profligacy. So, how and when did we as a society normalise ‘spending other people’s money’ on largesse on this scale?

As mentioned in other commentaries before on this subject, one must distinguish between ‘good subsidies’ and ‘bad subsidies’. The latter creates jobs and facilitates and spurs growth of the economy. By failing to target subsidy delivery by tying them to specific needs and segments of beneficiaries, ‘bad subsidies’ hurt the very sections that they allegedly wish to serve.

The debate on freebie politics has to be a debate on how policies that foster the ‘spirit of enterprise’ are morally and ethically – not to mention, economically – superior to the politics that breed a ‘culture of entitlement’. This debate also has to be about making a wise choice on politics that creates a ‘ladder of opportunities’ versus politics that draws one into a ‘cesspool of freebies’.

Finally, this debate has to be about preferring a targeted safety net meant to help the vulnerable bounce back economically, while rejecting ‘crutches of subsidies’ that are meant to create widespread dependence. Much like time-bound caste affirmative action is supposed to provide a leg-up to those socio-economically lagging behind, instead of becoming a permanent fixture for competitive community aspirations.

It is time to decisively shift the public debate towards fiscally responsible politics and policies of empowerment that seek to foster the spirit of enterprise, while spurring the virtuous cycle of economic growth.