Who Stole My Tax Money? Freebies!

Should the taxpayer bear the brunt of electoral promises made by politicians? Many parties today have gone to the next level beyond Roti Kapda and Makan"s promises from the earlier days. They promise, among other things, free electricity and free water with certain consumption limits.

NewsBharati    13-Dec-2022 16:33:34 PM
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-CA Aditya Sesh

Should the taxpayer bear the brunt of electoral promises made by politicians? Many parties today have gone to the next level beyond Roti Kapda and Makan's promises from the earlier days. They promise, among other things, free electricity and free water with certain consumption limits.

In Delhi alone, the cost of freebies on electricity totaled Rs. 3,090 crores in 2021-22 from Rs.1,050 Cr in 2015-16 which is almost 5.06% of the total budgeted revenue of Delhi Government is Rs. 61,000 crores. The Delhi government owes Transco approximately Rs.1,200 Cr.

The freebie promises made in Punjab are equal to Rs.24,865 Crores on total revenue of Rs.1,32,000 Crore (18.83%). It is common knowledge that most discoms including Punjab have not been paid by the government for the cost of freebies almost to the extent of Rs.9,000 Crores. This has resulted in a deterioration in services and will eventually prevent efficiency unless governments end up managing these utilities better. It is better to provide quality power rather than unreliable fluctuating power that destroys equipment. It has been observed that many farmers tend to keep the pumps on all the time since power is free, motors burn and the water level keeps falling.


Today the electorate of Gujarat has proved that they are relatively mature by rejecting the freebie policies and promises made by some political parties. This is something to be emulated by citizens in other states of India. The Gujaratis realized that nothing comes for free, rather quality power at reasonable prices comes at the right price. Gujarat, Goa, and Maharashtra are amongst the few states where the discoms earn a surplus.

The model code of conduct on the basis of the judgment by the Supreme Court of India has already a mechanism to cope with these nonsensical shoot-and-scoot promises, made by the candidates without any basis. It mandates that both Ways and Means to achieve this must be stated. But this is not enough! The Election Commission is requested to simply decisively exclude specifically never-ending freebies that have no basis like free water and free electricity under this directive and restrain political parties from making such promises that damage the state finances, even though ways and means may have been disclosed. Any such promise must be termed as a violation of the MCC.
While it may be advantageous for political parties to make freebie promises, fulfilling them causes financial stress to the State and by implication, the exchequer of the finances of the Transco Corporation resulting in poor service and ultimate degradation. The argument that citizens benefit and hence the state must pay is not a valid argument as it harms citizens' interests indirectly. This is an indirect way to distribute more notes for votes by certain parties, to the so-called needy especially those who consume 200 units at 100% and 50% upto 400 capped at Rs.800 per month. Certainly 400 units per month is not a needy household!

Studies show that 80%+ of the consumers come under this scheme. If 80% of the consumers don't pay, it is certainly a financial disaster! As you can see from the above, clearly there is a difference between Freebies and Welfare. Freebies in very simple terms, do not have enduring benefits and do not solve a problem by going to the root cause. Freebies do not create any social assets, seem to have no end of life and they do not empower the beneficiaries. Welfare spending on the other hand is all that Freebies are not. As an example, free electricity is a freebie, free education is not! Let me state that every right-thinking individual in the country will be in favor of extending a helping hand to those BPL families that are much below the poverty line and consuming up to say 75 units(basic appliances) of electricity or less per month for a certain number of years. There must be a plan to upgrade the lives of such citizens. However, parties making the promises may well pay for it from the party funds since it is the party that benefits from it by way of being voted in.

A Writ petition in the Supreme Court Stands today on the freebies of the government mainly on electricity. These freebies are financed by tax revenue. Therefore it is only right that the taxpayers represented by their body must also be part of the plaintiffs and need to come to join in as an intervenor. We follow the progressive system of Tax principles that are used for the redistribution of wealth from the rich, by way of amenities and support to the poor using differential tax rates revenue. Such differentials go towards the provision of services to all needy citizens at almost no cost. Frivolous Freebies are in addition to these services. Frivolous Freebies are those that come without sunset clauses and do not create any long term benefits or social assets. Structural promises like road infrastructure, structural reforms, good quality of service for a reasonable price, and good governance are obviously outside the definition of a Freebie. Promises during pandemics or catastrophic events are also not Freebies. The Supreme Court in its wisdom is requested to grant equity to all sections of society by restraint to those that promise mindless Freebies.

Legislators must specifically ban such frivolous Freebies under the Fiscal Responsibility & Budget Management Rules itself. As things stand, the CAG can qualify during the review under the rules on the use of borrowings for productive purposes and these qualifications must be reported in the media as well.

The Election Commission must be decisive in restraining such frivolous freebies, rather than leaving it to the people to decide. There is an inherent conflict of interest between those who benefit from a Freebie and injustice to those that contribute and thus cannot be left to the people to decide. Such restraint will not be overarching, since it prevents financial foolishness due to electoral promises. It also creates an unfair disadvantage to those parties that are financially prudent in governance.

If villages/towns/cities adopted the Modhera model, generated their own electricity and ran their own solar pumps, regenerated dried-up lakes, did rainwater harvesting, and build check dams through MNREGA schemes, conserve water and electricity, no self-respecting voter would go near those that make such promises. The Power is with us, the citizens of this country, we must use this power!

The frivolous Freebie culture must end.