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16 Feb 2026·Source: The Hindu
4 min
EconomyPolity & GovernanceSocial IssuesEDITORIAL

Fiscal Prudence vs. Election Freebies: A Recurring Indian Dilemma

Pre-election freebies undermine fiscal discipline; targeted welfare, not entitlements, is needed.

Fiscal Prudence vs. Election Freebies: A Recurring Indian Dilemma

Photo by Aquib Akhter

Editorial Analysis

The author argues that fiscal prudence is often sacrificed for electoral gains through the proliferation of welfare schemes. The author advocates for efficient, targeted, and time-bound welfare administration with measurable outcomes and fiscal discipline, suggesting Tamil Nadu should lead the way.

Main Arguments:

  1. Pre-poll bonanzas are common in India, with parties across the political spectrum offering benefits to voters.
  2. Tamil Nadu Chief Minister M.K. Stalin disbursed ₹5,000 to 1.31 crore women under the Kalaignar Magalir Urimai Thogai scheme, including a 'special summer assistance' of ₹2,000.
  3. The BJP-led Central government announced ₹6,000 a year to farmers under the Pradhan Mantri Kisan Samman Nidhi before the 2019 Lok Sabha elections.
  4. The Mahayuti government in Maharashtra rolled out a women-centric scheme modeled after Madhya Pradesh’s Ladli Behna Yojana before the 2024 elections.
  5. Before the Assembly elections in Bihar, the Prime Minister launched the Mukhyamantri Mahila Rojgar Yojana, transferring ₹10,000 each to 75 lakh women.

Counter Arguments:

  1. M.K. Stalin defended his government’s move by contending that it had “thwarted the attempts of the BJP” to halt the distribution of monthly assistance under the KMUT scheme.
  2. Edappadi K. Palaniswami accused the Chief Minister of suffering from the “fear” of losing elections after having made the State “insecure” for “girls, women, and senior citizens.”
  3. Edappadi K. Palaniswami consistently alleged that the DMK regime broke its promise of universal coverage for the women’s cash assistance scheme.

Conclusion

What is required is not the proliferation of welfare schemes, but their efficient and targeted administration for a defined period. They cannot be entitlements without measurable outcomes or fiscal discipline. It would only be fair to expect Tamil Nadu to pave the way for a regime committed to this principle.

Policy Implications

The author implies that policies should focus on efficient and targeted welfare administration with measurable outcomes and fiscal discipline, rather than simply offering pre-poll bonanzas.

In Tamil Nadu, Chief Minister M.K. Stalin disbursed ₹5,000 to 1.31 crore women under the Kalaignar Magalir Urimai Thogai scheme, including a 'special summer assistance' of ₹2,000. This move, costing ₹6,550 crore, occurred amidst accusations against the Centre for biased fund allocation.

Such pre-poll bonanzas are common across Indian states, with parties offering benefits like the Pradhan Mantri Kisan Samman Nidhi. Maharashtra and Bihar have also launched similar schemes before elections. AIADMK's Edappadi K.

Palaniswami promised ₹2,000 per month to women-headed ration card families if elected. The article argues for efficient, targeted welfare administration over indiscriminate freebies, emphasizing fiscal discipline and measurable outcomes.

Key Facts

1.

Chief Minister M.K. Stalin disbursed ₹5,000 to 1.31 crore women in Tamil Nadu.

2.

The disbursement included a 'special summer assistance' of ₹2,000.

3.

The Tamil Nadu government incurred an expenditure of ₹6,550 crore.

4.

The BJP-led Central government announced ₹6,000 a year to farmers under the Pradhan Mantri Kisan Samman Nidhi before the 2019 Lok Sabha elections.

UPSC Exam Angles

1.

GS Paper II: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

2.

GS Paper III: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

3.

Connects to syllabus topics like Fiscal Policy, Public Finance, Welfare Schemes, and Constitutional Provisions related to financial relations between Centre and States.

4.

Potential question types: Analytical questions on the impact of freebies on state finances, statement-based questions on FRBM Act and Finance Commission recommendations.

In Simple Words

During election time, politicians often announce freebies or special schemes. This is like giving gifts to voters to get them to vote for their party. However, this can create a problem if governments spend too much money on these short-term benefits instead of long-term development.

India Angle

In India, it's common to see governments announcing schemes like cash transfers or free goods before elections. This can affect the average Indian because it might influence who they vote for, and it also impacts how the government spends its money, which could affect things like infrastructure or healthcare.

For Instance

Think of it like a shopkeeper offering big discounts right before Diwali. It attracts customers, but if the shopkeeper only focuses on discounts and doesn't manage their inventory or invest in new products, the business might suffer in the long run.

It matters because these decisions affect everyone. If governments prioritize short-term gains over long-term planning, it can impact the economy, development, and the overall well-being of citizens.

Election freebies might seem good now, but they can hurt us later if governments don't manage money wisely.

Visual Insights

Key Figures from Tamil Nadu's Welfare Scheme

Highlights of the Kalaignar Magalir Urimai Thogai scheme disbursement.

Amount disbursed to women
₹5,000

Total amount disbursed per woman under the scheme, including summer assistance.

Number of women beneficiaries
1.31 crore

Total number of women receiving benefits under the Kalaignar Magalir Urimai Thogai scheme.

Cost of the scheme
₹6,550 crore

Total cost of disbursing the amount to the beneficiaries.

Special Summer Assistance
₹2,000

Additional amount given as special summer assistance to each beneficiary.

More Information

Background

In India, the debate around fiscal prudence versus election freebies is ongoing. The Constitution of India mandates certain responsibilities for both the Union and the States regarding economic welfare. However, the specific interpretation and implementation of these directives often become contentious, especially before elections. Political parties frequently announce schemes and benefits aimed at garnering popular support, raising concerns about their impact on the economy. The Finance Commission plays a crucial role in recommending principles governing the distribution of tax revenues between the Union and the States. States often argue for a larger share of central taxes to fund their developmental and welfare programs. The central government, on the other hand, emphasizes the need for fiscal discipline and adherence to budgetary targets. This difference in perspective often leads to accusations of biased fund allocation, as seen in the context of Tamil Nadu's recent disbursement of funds. The FRBM Act 2003 was enacted to promote fiscal discipline and reduce the fiscal deficit. However, the implementation of this act has faced challenges, particularly during periods of economic slowdown or before elections when governments tend to increase spending. The debate revolves around balancing the need for fiscal responsibility with the imperative to address socio-economic needs and fulfill electoral promises.

Latest Developments

In recent years, there has been increased scrutiny of pre-election promises and their impact on state finances. Several states have announced populist schemes, including cash transfers, loan waivers, and subsidized goods, leading to concerns about fiscal sustainability. The Reserve Bank of India (RBI) has also cautioned against unsustainable levels of debt and the potential impact on economic stability. The Fifteenth Finance Commission, in its report, emphasized the need for states to maintain fiscal discipline and avoid excessive borrowing. The commission recommended measures to improve revenue mobilization and expenditure management. It also highlighted the importance of transparency and accountability in the implementation of welfare schemes. The central government has been promoting schemes like Direct Benefit Transfer (DBT) to ensure efficient and targeted delivery of benefits. Looking ahead, the debate on fiscal prudence versus election freebies is likely to intensify as states approach elections. There is a growing recognition of the need for a balanced approach that addresses socio-economic needs while ensuring fiscal sustainability. The focus is shifting towards efficient and targeted welfare administration, with an emphasis on measurable outcomes and long-term economic benefits.

Frequently Asked Questions

1. What is the central issue in the debate between fiscal prudence and election freebies?

The core issue revolves around balancing the need for social welfare with the importance of maintaining fiscal discipline, especially when pre-election promises can strain state finances and lead to unsustainable debt.

2. How do pre-election freebies potentially impact the economy?

Indiscriminate freebies can strain state finances, leading to increased debt and potentially hindering long-term economic growth. They can also divert resources from essential sectors like infrastructure and healthcare.

3. What are some examples of pre-election schemes mentioned?

Examples include the Kalaignar Magalir Urimai Thogai scheme in Tamil Nadu, the Pradhan Mantri Kisan Samman Nidhi, and women-centric schemes rolled out by the Maharashtra government.

4. What is the significance of the ₹6,550 crore expenditure by the Tamil Nadu government?

The ₹6,550 crore expenditure highlights the substantial financial commitment governments make towards welfare schemes, especially before elections. This figure is important for understanding the scale of fiscal implications associated with such initiatives.

5. What is the Pradhan Mantri Kisan Samman Nidhi, and when did it come into being?

The Pradhan Mantri Kisan Samman Nidhi provides ₹6,000 a year to farmers. It came into being in February 2019.

6. What are the arguments for and against election freebies?

Arguments for freebies include immediate economic relief and social welfare, while arguments against include fiscal strain, potential for corruption, and distortion of economic priorities. Freebies can provide short-term benefits but may compromise long-term sustainability.

7. What is the role of targeted welfare in addressing the issues related to election freebies?

Targeted welfare focuses on providing benefits to specific, deserving populations, ensuring efficient resource allocation and minimizing fiscal strain compared to indiscriminate freebies. This approach emphasizes measurable outcomes and sustainable development.

8. How do Centre-State financial relations play a role in the context of election freebies?

Accusations of biased fund allocation from the Centre to states, as seen in the Tamil Nadu example, can incentivize states to announce populist schemes to compensate for perceived financial inadequacies. This dynamic highlights the need for transparent and equitable financial relations between the Centre and states.

9. What reforms are needed to promote fiscal prudence while ensuring social welfare?

Reforms include promoting efficient and targeted welfare administration, enhancing transparency in government spending, and establishing independent fiscal councils to monitor and advise on fiscal policies. Encouraging data-driven decision-making and measurable outcomes is also crucial.

10. Why is the debate surrounding fiscal prudence versus election freebies a recurring dilemma in India?

The debate is recurring due to the combination of widespread poverty, social inequality, and the competitive nature of Indian politics, where parties often resort to populist measures to gain electoral advantage. The Constitution mandates certain responsibilities for both the Union and the States regarding economic welfare, but the specific implementation of these directives often becomes contentious, especially before elections.

Practice Questions (MCQs)

1. Consider the following statements regarding the Fiscal Responsibility and Budget Management (FRBM) Act, 2003: 1. It aims to reduce the fiscal deficit to a specified percentage of GDP. 2. It only applies to the central government and not to state governments. 3. It was enacted based on the recommendations of the Finance Commission. Which of the statements given above is/are correct?

  • A.1 only
  • B.2 only
  • C.1 and 3 only
  • D.1, 2 and 3
Show Answer

Answer: A

Statement 1 is CORRECT: The FRBM Act, 2003 aims to reduce the fiscal deficit to a specified percentage of GDP. Statement 2 is INCORRECT: While the original act focused on the central government, subsequent amendments and state-level legislation extended similar principles to state governments. Statement 3 is INCORRECT: The FRBM Act was not directly based on the recommendations of the Finance Commission, though the commission's reports often address fiscal consolidation.

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