Freebies vs Welfare Schemes and its Impact on Economy

An economy or a nation is made up of different people with different financial conditions. Some of them are financially stable while others are not, so the government runs welfare schemes for the economically weaker section of the society to get easy access to basic amenities. The welfare schemes in India usually provide, some basic goods and services at a discounted/subsidized rate to the people belonging to the backward castes or economically backward people. However, in recent years, it has been seen that some state governments and even the central government have started offering freebies to the people. At present freebies have become a hot topic of discussion among the common people, and their political parties have their different opinion on this matter.

What are Freebies?

In simple terms, freebies can be understood as the goods or services that you get but don’t need to pay for them, or in other words, something you get for free is called freebies. Freebies are quite popular in Indian politics, as in past many cases have been reported where politicians tried to earn votes by giving away freebies. But, today it has been observed that many state governments are distributing freebies among their citizens. For example free electricity up to 100 units, free bus rides for women and children, free rations, free medical healthcare, and education, etc.

Freebies vs Welfare Schemes

Understanding Freebies:

Freebies can result as a boon for citizens but a curse for the government if the freebies are not operated properly. In many ways, freebies turn out to be very helpful for the common man as it acts as a helping hand and lets them save some money. As per the present economic condition of India, more than 50% of its population works a daily wage worker with an average salary of Rs 372/day. With such a lower salary, it becomes quite difficult for the daily wagers to survive and in such conditions, if they get freebies from the government, this is nothing less than a boon for them. 

While on the other hand, freebies are one of the most common techniques used by politicians to seek votes in the election. It has been often observed that many political parties distribute free stuff among people before the election to seek more votes from them. Also, freebies make people less productive as they need to do nothing to earn freebies, thus weakening the gross production capacity of the nation.

What is the Difference Between Freebies and Welfare Schemes?

Freebies	Welfare schemes
This is for free and the person needs to pay nothing for it.	It tends to provide some specific goods and services at subsidized prices.
It can be offered by an individual, political party, government, etc.	The welfare schemes are only launched by the government in power.
It makes people less productive	It motivates people to work hard and increases productivity
It applies to any kind of goods and services	It applies only to a selected category of goods and services
It can result in a considerable loss to the government revenue	It is designed keeping in mind the government revenue and amount available for expenditure.

Impact of Freebies on Nation’s Economy:

Freebies have both a positive and a negative impact on the economic growth of a nation. Freebies can tune out to be quite helpful for the economic growth of India, but only if it’s properly planned and channelized. If it’s not properly planned, it can result in a huge barrier to economic growth. If a government is distributing freebies among its citizens, then they are spending a huge sum of money from the government treasury. And to run a nation or a state, the respective government must have enough funds, otherwise, it suffers a debt. Freebies can only be considered helpful if they can generate equal revenue for the government in return. For example, if a government decided to provide free and high-quality education to all the students, then there is a possibility that these students will return a good revenue to the government in the future by paying taxes.

Way Forward:

A variety of freebies are often seen distributed among people in India. For example, free electricity up to 100 units is offered in some states and India, while some offer free bus rides for women and children. While on the other hand, the government of India also distributed free rations to the people below the poverty line during COVID-19. But Freebies are not the right to way help citizens, as they add an additional burden on the budget of a state. In 2013, the supreme court stated in one of its hearings that the budget for freebies is going above the regular budget. In order to properly channel the functioning of freebies, it needs to be rationalized, based on necessity. For example, healthcare and education are basic necessities for each citizen thus freebies in this sector shall be allowed. But providing free electricity, free public transport, etc, adds a burden on the state budget. Thus the best way is to launch more and more welfare schemes focusing on the basic needs of citizens so that people get stuff of their basic necessities at discounted rates and do not rely on freebies.