Manas Dasgupta
NEW DELHI, Feb 19: The Supreme Court on Thursday strongly criticised the state governments indulging in distributing “freebies” on the eve of the Assembly elections and wanted to how such governments would fund the actual developmental projects and said it was high time to revisit such policies that hamper the country’s economic development.
“Most of the States in the country are revenue-deficit States and yet they are offering such freebies, overlooking development,” a Bench comprising Chief Justice Surya Kant and Justices Joymalya Bagchi and Vipul M. Pancholi said.
A proposal from poll-bound Tamil Nadu’s government – to provide free electricity to its customers, irrespective of financial status – was the trigger for scathing remarks on states spending crores on subsidies while running into budgetary deficits and complaining about a lack of money for development. Taking note of the Tamil Nadu Power Distribution Corporation Limited’s plea the top court said it was quite understandable if States hand-hold the poor.
The Bench said economic development of the nation gets hampered with this kind of largesse distribution and States should work to open avenues for employment instead of giving free food, cycles, electricity to all. The top court, however, issued notice to Centre and others on the plea of the DMK government-led power distribution firm which proposes to provide free electricity. The power firm has challenged a rule of the Electricity Amendment Rules, 2024.
“What kind of culture are we developing in India? It is understandable that as part of the welfare measure you want to provide to those who are incapable of pay the electricity charges,” the Bench said. “But without drawing a distinction between those who can afford and those who cannot, you start distributing. Will it not amount to an appeasing policy,” the Chief Justice asked.
The Bench asked why the Tamil Nadu firm suddenly decided to loosen the purse strings after the electricity tariff was notified. “The States should work to open avenues for employment. If you start giving free food from morning to evening then free cycle, then free electricity then who will work and then what will happen to the work culture,” the Chief Justice said. The Bench said States, instead of spending on development projects, do two jobs – paying salaries and distributing such largesse.
The court also asked the state government to explain why this scheme had been announced “at the last minute”, leaving power distribution companies scrambling to adjust tariffs and budget calculations. “What kind of culture are we developing pan-India? And now we are reaching a stage where we transfer cash into people’s account directly…imagine.”
“It is understandable to provide, as part of a welfare system, for those who cannot pay. But if you distribute without distinction between those who can afford and those who can’t…” “There are children who cannot afford education. Then the state must provide… it is the state’s duty. But those who are affluent (but still) any kind of freebie first comes to their pocket. Is it not high time for states to revisit these policy frameworks?” the Chief Justice asked.
At least a quarter of each state’s revenue must be used for development work, he said. “Sometimes we are really disturbed. Even if you are a revenue surplus state… is it not your obligation to spend for development for the overall public – to develop infrastructure, hospitals, schools, and colleges? Instead, you keep on distributing things at the time of election.”
“Not a single penny is left,” the court told the Tamil Nadu government, “for development because of such policies by state governments. It is the problem of all states, not just yours.” Justice Joymalya Bagchi, also on the bench, made a point about planned and unplanned expenditure, and suggested states wishing to distribute ‘freebies’ “put it in your budgetary allocation and justify how you will do so (spend the money).”
The court was hearing a writ petition filed by the Tamil Nadu government seeking to quash Rule 23 of the Electricity Amendment Rules of 2024, on grounds it was “arbitrary, unreasonable, unworkable unconstitutional, illegal, violative of Article 14, and against the provisions of the Electricity Act, 2003.” Rule 23 governs the gap between approved Annual Revenue Requirement and estimated annual revenue from approved tariffs. The court noted that had these subsidies been announced in advance, they could have been factored into distribution companies’ financial projections.
Sudden policy decisions, the court said, create arbitrariness and disrupt regulatory processes. The court finally directed the Tamil Nadu government to file a reply to its question – i.e., where is it getting the money to fund its promise of free electricity. Notice was also issued to the centre.
Earlier in January also the apex court had drawn a clear line between State functionaries splurging public money on irrational freebies and “investing” in welfare schemes for the marginalised sections. “Distribution of State largesse to individuals at a large scale is different from investing State largesse in public welfare schemes. That distinction should be kept in mind,” Chief Justice Surya Kant had observed orally.
The Supreme Court asked why there was no “dedicated diversion of revenue surplus for developmental purposes which would further the constitutional ideal of inclusivity through free medical care and education for the poor and those not in the creamy layer of the society. The State has a commitment towards this end.”
The Chief Justice had said launching welfare schemes was an obligation the State had to achieve under the Directive Principles of State Policy in the Constitution. The oral observations from the Bench, also comprising Justice Joymalya Bagchi, were in response to an oral mention made by advocate Ashwini Kumar Upadhyay for early listing of a batch of petitions seeking a judicial declaration that irrational freebies offered by political parties to lure voters during poll time should be considered a “corrupt practice.”
Mr Upadhyay said when the petition was filed, the nation was in debt of ₹1.5 lakh crore, which had since increased to ₹2.5 lakh crore. Every Indian was in debt, and yet the State continued to rain freebies before elections, he submitted. “This is a very, very important matter,” Chief Justice Kant reacted, agreeing to list it early for hearing.
‘Freebies’ became a political issue after Prime Minister Narendra Modi attacked opposition parties like the Congress and Arvind Kejriwal’s Aam Aadmi Party, accusing them of trying to buy votes with “revdis.” Opposition parties counter-attacked by pointing to the BJP-led government’s track record on inflation and jobs, arguing there was nothing wrong with spending taxpayer money to make people’s lives easier.
