Why is it in the news?
The Supreme Court expressed concern over the increasing trend of electoral freebies and cash transfers.
Debate reignited on freebies vs genuine welfare and fiscal sustainability.
Category: Polity
Important Points:
● Economic Survey 2025–26 estimates ₹1.7 lakh crore cost of freebie schemes in FY26
● States’ gross fiscal deficit rose from 2.6% (FY22) to 3.2% (FY25)
● Outstanding liabilities of states at ~28.1% of GDP
● SC (S. Subramaniam Balaji, 2013) held freebies fall within legislative policy
● RBI warns freebies crowd out capital expenditure and strain budgets
● Examples: free electricity, loan waivers, cash transfers, consumer goods distribution
● Freebies may create dependency culture and discourage self-reliance
● Welfare schemes aligned with DPSP focus on long-term human development
● FRBM Act, 2003 recommended for strengthening fiscal discipline
● Suggested reforms include sunset clauses and disclosure of fiscal viability