BJP Slammed for 'Freebies' Case; State Exchequers Hit by Shrinking Divisible Pool, Say Critics

Several political parties in the country have come down heavily on the Bharatiya Janata Party (BJP) over the current row on “freebies”.

BJP’s Delhi unit leader Ashwini Upadhyay’s petition seeking an end to the culture of “freebies” has stoked intense debates around subsidies, welfare measures and corporate concessions. He sought the Supreme Court’s direction to register FIRs against political parties for allegedly influencing voters by offering freebies.

The Dravida Munnetra Kazhagam (DMK) argued that the petition filed by Upadhyay focused only on “freebies” promised to marginalised sections of the society, but did not take into account “the massive loan waivers and tax holidays which were granted to corporates”.

The Aam Aadmi Party (AAP) slammed the BJP for allegedly running a “dostvaadi” (favouring friends) model by using the taxpayers’ money to write off tax and loan dues worth Rs 10 lakh crore for their super-rich friends.

Mritunjay Tiwari, Rashtriya Janata Dal’s (RJD) national spokesperson, said, “When any government makes policies to benefit people of deprived sections, it’s called welfare. Nowadays, leaders of a particular party (BJP) are calling it freebies, which is absolutely wrong.”

Even the YSR Congress Party (YSRCP), which is on friendly terms with the BJP-led government at the Centre, filed an impleadment application at the Supreme Court to intervene in the “freebies” case and sought to distinguish parties who make hasty poll promises from those that introduce “well-formulated programmes after careful deliberations”.

The Telangana Rashtra Samithi (TRS) is also set to move a plea in the Supreme Court stating that welfare schemes being implemented by state governments should not be viewed as “freebies”.

Upadhyay’s plea targeted state parties whose governments are believed to sway voters while placing a huge burden on the state exchequer.

WHY IS SC HAVING A SAY?

While hearing the case on August 17, the Chief Justice N V Ramana said, “There has to be a distinction between offer of ornaments, television sets, consumer electronics free of cost and real welfarist offers.”

Tamil Nadu finance minister Palanivel Rajan has raised the question “since when does any country’s Constitution allow the Supreme Court to decide how public money is spent?”

“What the State’s expenditures are and how resources should be raised for them are within the domain of the governments. The Supreme Court should have no role to play in it,” said development economist Prof Venkatesh Athreya.

“I visited two villages after television sets were doled out to the public in Tamil Nadu. The people there said, ‘this is the first time we are watching the news’. Visual medium reaches out well to the rural public. Who is the chief justice to say what is welfare and what is not?” Prof Athreya added.

In 2011, the AIADMK government initiated schemes that gave out fans, grinders, mixers and laptops to people at no cost.

“Fans were given to the poor by the AIADMK, but it is not like people were demanding fans. If people cannot afford it, what is the problem if the government provides it?” said Prof Athreya.

‘IS CORPORATE CONCESSION NOT A FREEBIE?’

The BJP has been criticised for accusing state schemes targeted toward the poor and marginalised as “freebies”, while tax cuts to the rich are called “concessions”.

“The discussion on ‘freebies’ must be looked at in the context of waiving off loans and incentives to the capitalists. It is argued that these measures would increase employment opportunities, but there is no data to prove it. Yet the finance minister has made extensive tax concessions to corporates,” said Prof Athreya.

In 2019, India slashed corporate tax rates to 22% from earlier 30% for existing companies and to 15% from 25% for new manufacturing companies. The government rolled back the enhanced surcharge imposed on foreign portfolios in Budget 2019-20, which benefited foreign investors.

“In total, Rs 3 lakh crore concession was provided to the businesses. To compensate for the loss, the government is selling off public sector assets to the worth of Rs 3 lakh crores,” Prof Athreya said.

In an application seeking to implead itself in the petition before the Supreme Court, the DMK cited, “In [the] last five years, Rs 9.92 lakh crore loans were written off by banks out of which, Rs 7.27 lakh crore is the share of public sector banks alone. Is this not freebies for corporates?”

‘EXCHEQUERS HIT BY TAX CUTS’

In its hearing on August 11, the apex Court stressed the need to create a balance between providing welfare measures and the economic strain on the exchequer.

“The state exchequer is losing out from the lack of funds from the Union government. The central government is reducing its commitment and questioning the state governments. This is a matter of central-state relationship,” observed Prof Athreya.

He further said, “When the Indian government decided to make large tax concessions, it reduced the available divisible pools to all the state exchequers. This reduces funds to the state, and the states are not consulted in the process.”

Prof Athreya continued, “Such concessions lead to much larger inequality among people. Arguments on freebies are completely misleading; when given to the rich, they are called incentives, and when it is the poor, it is subsidies, and even worse 'freebies'."

“All direct taxes are with the Indian government in the form of income tax, GST, fuel tax etc., and those rates are suddenly increased. So, it is the ordinary people who pay the bulk of the tax in the country,” he added.