When freebies run on felled trees

Ajit Ranade

There are moments in public life when a single news item captures the moral and fiscal drift of an entire political system. Last week, Maharashtra’s forest minister reportedly said that teak plantations worth Rs 12,000 crore may be monetised, including felling mature teak trees, to help raise funds and repay loans, partly necessitated by the mounting fiscal burden of welfare commitments such as the Ladki Bahin scheme. The annual outlay for that scheme alone is estimated between Rs 36,000 and Rs 46,000 crore, which is over 5% of the state’s total expenditure.

For a moment, we may pause and reflect on the symbolism. Forests are not surplus inventory. They are ecological assets meant for future generations. They are carbon sinks in a climate-stressed world. They regulate water cycles, protect biodiversity, and serve as natural insurance against environmental collapse. To cut them down to finance annual revenue expenditure, especially recurring cash transfers, is not merely a budgetary decision. It is intergenerational liquidation. If trees are felled this year to fund this year’s freebie burden, what will be cut next year? Even if the teak plantation stock is being marketed as a “departmental asset”, the political symbolism is unavoidable: the state is contemplating drawing down long-lived environmental capital to service recurring revenue commitments.

This is not an isolated case. Across India, competitive populism has acquired new velocity. It has been enabled by technology. The JAM trinity – Jan Dhan accounts, Aadhaar identity, and mobile connectivity – has made direct benefit transfers seamless. More than 500 million no-frills bank accounts, Aadhaar-linked targeting, and instant transfers have allowed governments to move from distributing goods to transferring cash directly into bank accounts. The shift is politically transformative.

Cash transfers timed close to elections blur the line between governance and inducement. In recent hearings, the Supreme Court pointedly asked: Why are such schemes announced just ahead of polls? Will indiscriminate benefits, without distinguishing between those who can afford and those who cannot, not amount to an “appeasing policy”? The Court has warned that indiscriminate largesse hampers economic development and diverts resources away from roads, hospitals, and schools. A pending PIL seeks regulation of such promises, arguing that “irrational freebies” may distort the level playing field and even violate constitutional provisions governing public funds.

The judiciary is cautious about stepping into political territory, but its anguish is visible. Rights-based entitlements such as food security, rural employment guarantee (now diluted), primary education, and public health are constitutional commitments. Targeted support for the poor is morally defensible and economically sound. The real issue is something else. It is the slippery slope and the steady transformation of voters into “beneficiaries”. The language itself has shifted. Citizens with rights have become recipients of State generosity. It is worth reminding that freebie resources are drawn from taxes collected from the same citizens, or from deficits and debt their children will repay.

In the freebie race, to retain political advantage, payouts have been escalating. What began as targeted support is becoming quasi-universal entitlement. The 2017 Economic Survey had floated the idea of Universal Basic Income as a rational consolidation of subsidies. Instead, we are drifting into fragmented, election-driven quasi-UBI, layered on top of existing schemes, with duplication or overlaps, and without fiscal consolidation.

Resultantly, revenue deficits have widened. Capital expenditure has to be cut. States borrow to fund current consumption, violating a “golden rule” of public finance – borrowing should finance investment, not recurring consumption.

The Supreme Court’s recent remarks capture the anxiety: “Even if you are revenue-surplus, isn’t it your obligation to spend that amount on development—roads, hospitals, schools?” When forests are monetised to fund revenue expenditure, we cross from imprudence to peril.

The phenomenon may not be unique to India. Latin America has seen debt crises triggered by unchecked subsidies. Advanced economies face entitlement pressures as populations age. But what is different in India is the combination of scale, technology, development needs, and demography. We are not a saturated welfare State. We are still building basic infrastructure, including human capital. Every rupee spent on indiscriminate giveaways is a rupee denied to irrigation, railways, climate adaptation, urban drainage, or to education, skilling, and primary health.

Welfare vs appeasement

There is also a cultural cost. The Court has asked bluntly whether such schemes risk weakening work incentives. That concern should not be caricatured. Poor citizens are not lazy. Inflation, the cost of living, and unaffordable services are real concerns. However, when electorally driven benefits expand rapidly without fiscal backing, the signal shifts from empowerment to appeasement. Are voters becoming addicted to the freebie opium? Or are they so cynical about governance that they prefer immediate cash to long-term promises of infrastructure? Reversing this race to the bottom requires political courage and institutional reform.

First, fiscal transparency must be mandatory. Every manifesto promise should be accompanied by a publicly disclosed costing and funding source, whether taxes or borrowing. Second, adopt the golden rule formally: borrow only for capital expenditure, not for revenue giveaways. Third, empower an independent council to publish pre-election fiscal impact assessments of major promises and describe the trade-offs. Fourth, distinguish clearly between rights-based welfare (food, health, education, social protection for the poorest) and electoral inducements timed for political gain. Finally, voters must reclaim their role as citizens. Infrastructure decay, polluted rivers, failing schools, and now felled forests are not disconnected from freebie politics. They are its consequence.

A democracy that is cutting down forests for votes risks mortgaging its ecological future for an electoral present. Welfare is essential. Appeasement is corrosive. The difference lies in fiscal discipline, transparency, and respect for citizens, who are owners of the republic, not beneficiaries. If we do not draw that line now, next year’s burden will demand another forest.

(The writer is an economist)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.