‘Why cash transfers just before elections?’ Supreme Court questions freebies culture

The Supreme Court on Thursday made strong oral observations against the growing practice of State governments announcing ‘freebies’ in the run-up to elections. The Bench questioned how long such a trend would continue, cautioning that it could adversely affect the country’s long-term economic progress. 

It remarked that distributing State benefits indiscriminately, without distinguishing between those who can afford to pay and those who cannot, amounts to appeasement and is detrimental to sustainable development.

The Court observed that it was aware of developments in certain States during recent elections, where welfare schemes were unveiled shortly before polling. Raising concerns over direct cash transfer initiatives, the Bench asked whether such measures would discourage people from working.

A Bench comprising Chief Justice of India Surya Kant, Justice Joymalya Bagchi and Justice Vipul Pancholi was hearing a writ petition filed by the Tamil Nadu Power Distribution Company Ltd, challenging Rule 23 of the Electricity Amendment Rules, 2024.

During the proceedings, the Chief Justice raised queries about the State government absorbing electricity bills. Addressing Senior Advocate Gopal Subramanium, appearing for the State, CJI Kant observed: "Is it in the public interest that...the State is absorbing all these? Because of freebies, the entire country is already...we are not talking of Tamil Nadu in particular. We are talking of pan-India. What kind of culture are we developing? What is the the distiction between persons who are capable of paying the electricity bill and persons who are marginalised? It is understandable that, as a welfare state, you want to provide relief to the marginalised. But without drawing any distinction between those who can afford and those who cannot afford, if you start giving, will it not amount to a sort of appeasing policy?"

Noting that similar practices were prevalent across the country, the Chief Justice said, "We are sometimes really disturbed." He further questioned whether even revenue-surplus States should prioritise such schemes over infrastructure and public services. "Even if you are a revenue surplus state, is it not your obligation to spend that amount for the development of the overall public, to develop roads, hospitals, and schools. Instead of that, you keep on distributing food, clothes, and people enjoy everything at the time of elections. What is happening in this country?" CJI said.

The Bench reiterated that while assisting marginalised sections is a constitutional responsibility, blanket distribution of benefits requires reconsideration. "It is understandable when some people cannot afford, you have to provide. There are children who cannot afford education, then state must provide. It is the state's duty. There are children who are bright but cannot afford to go to medical colleges, State must help themn. But the persons who can enjoy, has all means available and are affluent and therefore any kind of freebie first comes to their pocket. Is it not high time for the states to revisit these policy frameworks?".

According to the Chief Justice, the basic principle remains that individuals should pay for services if they have the capacity to do so. He clarified that the Court was not advocating profiteering by State entities but suggested that costs should at least be recovered from those who can afford them.

"We know what is happening in the nearest places where the last elections took place. Why suddenly schemes are announced near elections? It is hightime that all political stalwarts, leaders, parties, and all social engineers, they need to revisit everything. We will be hampering the development of the nation if we keep on having this largesse distribution. There has to be a balance. But how long this will continue?," CJI asked.

He emphasised that States should prioritise long-term development strategies over short-term electoral promises. "Our worry is that the states are running in deficit and still giving all these kinds of distributing people money. From where that money is coming? Why shouldn't it be dedicated for development purposes? You can have a long term plan for roads, irrigation, electrical, whatever you want."

The Chief Justice also expressed apprehension over direct cash transfer policies. "You should create avenues for the employment of the people so that they can earn and maintain the dignity and self respect. If you start giving right from the morning free food, free gas, free electricity... You are directly transferring cash in the account. Why the people should work then? From where they are going to learn the work when they know everything I will get from one platform? Is it the nation-building we are doing?"

The Bench noted that similar petitions concerning the issue of freebies are pending before the Court. With respect to the petition filed by the Tamil Nadu power utility, the Court agreed to examine the challenge and issued notice to the Union government.
(With Live Law Inputs)