Will freebies work?

Will freebies work?

Polling has just been just completed in four states and now only West Bengal awaits its turn. One common, dominating feature of these elections has been the spectre of all political parties vying with one another in giving freebies to the voters.

Gone are the days when a free meal or liquor could buy votes. India is shining — so the value of freebies must be correspondingly higher. Take Tamil Nadu, for instance. In 2006, DMK announced giving free colour TV sets (to be financed by the tax payers’ money) to alleviate the misery of the poor! Many people who already had TVs collected the free sets and sold them to splurge on booze for a few days.

This time, DMK has added new sops like free mixer-grinder for all ration card holders and free laptops for SC, ST and BC (backward classes) first year students in professional colleges. AIDMK, not to be outdone, promises laptops for all ‘poor’ first-year students in technical colleges. Wikileaks informs us that in the last election cash envelopes were given to voters in some places along with the morning newspaper and party voting slips.
Further, according to media reports, DMK has promised to give Rs 30,000 for the wedding of a daughter who has passed matriculation exam (being projected as an incentive for getting girls educated).

Incidentally, if the objective is to facilitate education and empowerment of the girl child a much better scheme is the one by Nitish Kumar in Bihar where a cash amount is being given to the poor rural families to purchase bicycles for the girl child for commuting to school, instead of subsidising the marriage. Critics also allege that the DMK scheme of giving free TVs increased the subscriber base and revenue of the cable TV channels which are owned by the relatives of the DMK supremo.

Moreover, whenever the government purchases and distributes freebies, it creates a big scope for politicians and officials to get a hefty cut and the people can’t complain about the quality. By contrast, the Bihar government way of giving cash to buy bicycles eliminated the ‘cuts’ by middlemen and increased the chance that the receiver gets a better product or at lower price as she herself looks around and bargains.

In several past elections, competing political parties promised free electricity to ‘poor’ farmers which, in practice, meant free power to virtually all in rural areas. As a result, the demand for electricity skyrocketed as people switched from other fuels to free electricity for cooking (using electric stoves) and had no incentive to economise on the use of electricity for whatever purpose.

Power crisis

The bankrupt state electricity boards had no money to invest in additional power generation. The promise of free electricity resulted in long hours of power cut. The poor eventually suffered most. Small workshops had to go without power which caused work stoppage and loss of income. Bigger factories could afford to run captive generators. Poor people had to live in darkness for hours while the more affluent could get power from inverters  or generators.

This is one part of the picture. On the other side, the Centre is giving income tax exemption amounting to some Rs 45 crore to the International Cricket Council. It is being argued that it is a prior commitment made from 2006 onwards (when ICC Champions Trophy was held) in relation to profits made by any entity from holding international sporting events in India. Presumably the rationale behind the provision was that it would attract mega sporting events to India. But, does cash-rich ICC or BCCI need any tax exemption as incentive?

India is undisputably the most lucrative market for holding cricketing events, irrespective of any tax concessions. Hence, that logic does not apply in the case of cricket World Cup, IPL or any such commercial cricket venture, even if it may be valid for holding international events in other less popular and less profitable sports. The people who gain most from being associated with the big sporting events are rich and politically powerful people (just think of the names of the present and past bosses of ICC, BCCI, IPL, CWG, even state cricket associations) who benefit from the swelling coffers of the organisers which is further helped by tax exemptions and government favours of various kinds.
All these underline one basic malaise of the Indian democracy. We have not got rid of our feudal mindset. The top bosses of political parties treat these as their fiefdoms — like emperors they hoist their offsprings as successors if and when they decide to retire. In a similar vein, when in government, they consider tax payers’ money as if it belongs to them and would distribute largesse as a matter of right.

So, they find nothing wrong in giving free TVs or mixers to win votes or throwing crores of rupees and government plots to our cricket superstars, the way the kings used to do in earlier times to show appreciation to court performers. The easiest is to announce prizes for one Mahi (who, at this stage, does not need a crore or two, on top of his fabulous sponsorship income but at one stage could not afford to have a good bat) and bask in reflected glory; far more difficult is to improve the game’s infrastructure in distant towns and villages so that many more Mahis can come up.

(The writer is a former professor of economics, IIM, Calcutta)