The Cost of Freebies

As Assembly polls in five states draw near, an unhealthy competition to announce freebies has begun with an eye on wooing the electorate. The dangerous trend continues even after states were warned in the latest Economic Survey about the risk of bankruptcy. Prime Minister Narendra Modi has also denounced the practice on a number of occasions. But the Prime Minister’s appeal to the states has largely gone unheeded.

For instance, the West Bengal government has already started the Yuba Sathi scheme under which unemployed youths between 18–40 years of age will get INR 1500 per month for the next five years. Initially, the government decided to release the funds from August 15 next, but later decided to distribute them from April 1, 2026, the beginning of a new financial year. Again, the plan was changed and the funds have already been transferred to the bank accounts of eligible candidates. This promptness has to a great extent exposed the actual intention of the incumbent government, as it appears to be a move to woo the youth ahead of the elections.

Here it must be mentioned that West Bengal is not the lone exception. Fourteen other states have also adopted unconditional cash transfer schemes. States like Telangana, Maharashtra, Karnataka, Bihar and Tamil Nadu, among others, have launched similar schemes. From the present indications, it is almost certain that the numbers of states announcing freebies will rise further, as several states are scheduled to go to the polls during the second half of the year or early next year.

While the states may claim that these schemes are meant for the welfare of the people, there is a clear distinction between welfare projects and freebies. Welfare projects are launched to uplift vulnerable sections of society and often have long-lasting effects. Freebies, on the other hand, are not constructive schemes; they merely provide additional benefits free of cost and are unsustainable.

For example, the rural employment guarantee scheme is a welfare project as it helps create permanent assets while providing employment to unskilled workers who might otherwise struggle to find jobs. But direct money transfer schemes like West Bengal’s Lakshmi Bhandar or Maharashtra’s Ladli Behan Yojona are essentially freebies. Such schemes neither ensure real inclusion nor long-term empowerment, but serve a specific political purpose.

More worrying is that while governments in power have made it a habit to announce such freebies to pass the electoral test, opposition parties are also imitating them by promising even more lucrative giveaways to outsmart their rivals.