Modi's remarks on 'freebies' sparks debate; Opposition attacks govt's magnanimity towards corporates

Prime Minister Narendra Modi’s remarks disparaging political parties for announcing so-called 'freebies', forgetting that his party does too, to score electoral victories has kick-started a debate on welfare schemes, but not as much on corporate tax cuts and loan waivers to corporate.

Wading into this debate, the Supreme Court, while hearing a public interest litigation, questioned its jurisdiction on the issue and stated it did not want to look into the aspect of de-registration of political parties for announcing 'freebies'. The apex court called it anti-democratic.

Launching a counter-attack on PM Modi, who first made a comment on the 'freebies culture' on July 16, Aam Aadmi Party chief and Delhi Chief Minister Arvind Kejriwal has questioned the Union government’s finances. He said that his government’s schemes for free education, health care and electricity were not 'freebies'.

However, there’s more to the issue. Too many diverse electoral promises are, wrongly, getting clubbed under a single label (doles, freebies, handouts). Associate professor of economics at the Indian Institute of Technology (IIT) Delhi, Reetika Khera asserts that the right perspective on health, education and nutrition is the “rights perspective”.

“For instance, the case in the Supreme Court was not alluding - at all - to health and education. Yet, Arvind Kejriwal's video statement refers to schooling and health care as being under attack,” pointed out Khera. In this debate, the strain on the exchequer arising from sops to industry and bad loan waivers should also be discussed.

The developmental economist pointed out that as far as other electoral promises are concerned (electricity, laptops, gold chains), they should be discussed separately from those entitlements that are legislated upon, such as the subsidised rations under the National Food Security Act 2013.

Commenting on the issue, DMK MLA and Tamil Nadu finance minister P Thiagarajan underscored that there are as many “free programmes” in BJP-administered states, including most recently the free bus rides announced by the Chief Minister of Uttar Pradesh.

Questioning the PM, Thiagarajan asked if the Prime Minister forgot about the time he had flown down to Chennai in 2018 to launch the then AIADMK regime’s subsidised scooter scheme for working women where they were given Rs 25,000 each. “Did it not occur to him then that such freebies could be negative for the exchequer? The only government that has unconstrained borrowing capacity is the Union government because it can amend the Fiscal Responsibility and Budget Management Act, 2003, in Parliament to suits its whims and fancies,” he added.

The Madurai MLA wondered whether the Union government was trying to dictate how states should spend their limited resources, and if it was, it was nothing but 'dictatorial overreach'.

Pointing towards the concessions given to the industry, Communist Party of India (Marxist) general secretary Sitaram Yechury pondered what the Prime Minister would call the corporate tax rate cut, which led to a revenue loss of ₹ 1.84 lakh crore in two years. “Would it be a 'freebie' or just helping friends at the cost of public exchequer?” asked Yechury.

Taking a dig at the PM, Congress leader Randeep Surjewala questioned if the loan-waivers qualified as 'freebies'. In a series of tweets, Surjewala asked BJP its definition of freebies, "Is ₹10,00,000 lakh crore bad loan waiver freebies? Are loan waivers for Mallya-Nirav Modi-Mehul Choksi freebies? Is taking “haircuts” of a whopping ₹3,22,000 crore equal 61.2% of the admitted claims in NCLT & losing Public Money a freebie?” he tweeted.

Placing this debate in historical perspective, Professor Arun Kumar of the Institute of Social Sciences said India’s policies since independence have been top down, because of which very little has trickled down to the poor, contributing to widespread poverty.

Economists have been stating that income has risen, but recent data from the e-Shram portal, on which 27.5 crore unorganised sector workers have registered, has shown that 94% of them earn less than Rs 10,000 per month.

“This is a crisis of capitalism. If we had managed to give the poor employment and a living wage, then this problem would not have arisen. There are certain essentials of life – food, water, education and health – that everybody must have in a civilised society,” said Kumar.

He observed that the citizens don’t believe or trust politicians any longer, so they want what can be given immediately. And that's why parties draw up manifestos and soon after, they start promising things.

Underscoring that all governments – Union and states – should provide the essentials of life, Kumar added that the Union government cannot raise the issue unless it stops offering things.

Moreover, it must be remembered that the giveaways are also to large and well-off segments. “As a euphemism, the government calls what it gives to the well-off segments 'incentives', whereas what is given to the poor is being called 'freebies'. Why should money and funds be given to well-off segments, but what is being given to poor be cut down? This debate has been unnecessarily created,” maintained Kumar.

Close to Rs 4-5 lakh crore are going to corporates. If the wealth and gift tax is increased, the country can raise close to Rs 3 lakh crore from it. Corporate tax rates were cut, so the government gave away Rs 1.6 lakh crore there. If we add up all this, underscored Kumar, we could raise close to Rs 7 lakh crore. It is a question of priority.

The political economy of it has to be that you have to tax the wealthy and create funds in the government, remarked Kumar, so that you can have a Rural Employment Guarantee Scheme with much higher wages and an urban employment guarantee scheme can be created with higher wages. The high living standard of the rich and the middle class cannot be based on keeping those who are poor, poorer.