The Business of Freebies:
A Consulting Lens on Political Populism in India

~ Daksh Kalra

“Give a man a fish and you feed him for a day, teach a man to fish and you feed him for a lifetime.”

Free laptops, zero electricity bills, and cash transfers: the last few Indian elections have not just been a contest of ideologies or vision, but rather of incentives. Through this article, we aim to understand whether political freebies continue to serve as tools to ensure social justice in an unequal economy, or have they merely become vote-winning gimmicks that drain public finances and distort development priorities.

Before we delve further, we must understand the underlying difference between freebies and welfare schemes, since there exists a very thin line between the two. As defined by the Supreme Court in their ruling, “freebies are short-term handouts like free power, water, debt waivers, etc. that lack sustainability, distort markets, erode credit culture, and discourage work.” On the other hand, welfare schemes are comprehensive initiatives aimed at uplifting target populations through measures like subsidies, infrastructure development, skill enhancement schemes, etc.

Tracing the Evolution of Freebie Politics in India

The freebie culture in India can be traced back to the early years of independence, when the newly established government implemented policies aimed at reducing socioeconomic inequalities and widespread poverty. Welfare policies and subsidies became a crucial element of the development agenda at that time, with efforts focused on addressing hunger, improving healthcare, and enhancing educational access. However, in the 1990s, political parties began to embrace the practice of offering freebies and other short-term incentives. They started employing populist policies to garner votes, which was further reinforced as the economic reforms of that period worsened economic disparities and deepened the gap between the rich and the poor. Tamil Nadu was the first state to adopt this freebie culture, with politicians like M.G. Ramachandran and J. Jayalalithaa gaining popularity by distributing items such as coloured televisions, free rice, and kitchen appliances to voters.

At the national level, policies like providing free electricity in rural regions and waiving loans for farmers have become common practices in contemporary times. All political parties have begun to pledge various free goods and services, which has intensified the competitive nature of elections in India. States like Andhra Pradesh, Tamil Nadu, Punjab, etc. have faced financial difficulties as a consequence of these freebies and subsidies, inviting scrutiny to the trend of offering such incentives. Numerous economists and even the courts have called into question the sustainability of such policies and their impact on governance, making it a topic of continuous debate.

Why Freebies Thrive: Political and Social Drivers

The underlying cause of this freebie (or revadi) culture in Indian politics is linked to electoral strategies, socio-economic disparities, and the behavioural response of the public. The first major reason for this rise in freebie culture is the ambition of political groups to gain votes and attract electoral support by banking upon the immediate gratification of giving material benefits to the public. The promises of cash transfers, loan waivers, and numerous other commitments that we see in the election manifestos of almost every political party today are somehow targeted towards the electorate, especially those with scarce resources, since they are likely to favour those parties that can provide apparent and tangible benefits to them.

Another principle supporting the freebie culture is the aim to enhance social welfare and combat poverty. By offering handouts or freebies, political parties seek to project themselves as champions of the poor and vulnerable. Consequently, parties are inspired to deliver goods that can improve voters’ lives, even if it is only a temporary solution.

Moreover, Indian politics is inherently competitive, which drives the culture of freebies, as parties believe they need to match or surpass their rivals’ promises. With both sides aggressively vying for voter support, this process frequently leads to a continuous rise in extravagant promises, resulting in an unrestrained escalation of freebies.

Are Freebies Really Effective in Luring Voters?

In simple words, yes. Freebies play a major role in influencing voters and swaying them to vote in your favour. The major reason behind this is the existing economic disparities in the country.

• 65% of India’s population is youth, and yet 51% of them are unemployable. 
• The top 1% of the country accounts for 23% of the nation’s wealth, while the bottom 50% holds just 15%. 
• Farmers make up 22% of India’s population, yet 86% of them hold less than 1 acre of land.

For such vulnerable groups in society, ensuring day-to-day survival is a challenge, and hence it becomes relatively easier to sway such a population using freebies like loan waivers and direct cash transfers.

Devendra Fadnavis took charge as Maharashtra’s chief minister for the third time in 2024, a milestone widely attributed to the popularity of the direct cash transfer scheme, Mukhyamantri Majhi Ladki Bahin Yojana. 

An independent survey found that over half of Ladki Bahin beneficiaries voted for the Mahayuti alliance.

The same pattern was observed in Madhya Pradesh, where the government offered Rs 1,000 monthly cash assistance to women under the Mukhyamantri Ladli Bahna scheme, launched in 2023. 

An SBI research study indicated that the incumbent party had a higher success rate in districts with a higher number of marginalised women beneficiaries.

The Welfare Argument: Justifying Freebies

Proponents argue that freebies have a favorable influence on economic results and social behavior. While critics of freebies frequently emphasize their effects on the demand side of the economy but the positive implications on the supply side, resulting from increased disposable income for individuals, are often neglected. It is noteworthy to mention that while the RBI did express worries about freebies diverting funds necessary for infrastructure, it also acknowledged that “not all states are so financially weak that they can’t announce freebies.” Furthermore, those in favour of freebies also assert that in regions where citizens have experienced limited economic advancement or hold skepticism towards political parties, freebies can boost public confidence and satisfaction with the government.

Karnataka: Free bus rides led to an increase in women’s workforce participation

Karnataka CM Siddaramaiah launched the Shakti scheme in June 2023, wherein they offered free bus rides to women and girls on all government buses. This initiative helped women save money, which was then diverted towards food and accommodation, thereby boosting the supply side of the economy as well.

The scheme has allowed thousands of women to visit temples and tourist spots without the financial strain of travel costs. As a result, temple revenues rose by around 18%, with daily footfall nearly tripling after the scheme’s launch.

The Hidden Costs of Freebie Culture

Despite all the benefits that freebies seem to offer on the forefront, not all of it is rosy. In the words of Milton Friedman, “There is no such thing as a free lunch.” The fact that most of the freebies are offered in the run-up to elections reflects the underlying motive behind them.

Even if states can afford freebies, investing the same money in infrastructure and social programmes would have multiplier effects on the economy. Moreover, according to the RBI, freebies discourage work at the prevailing wage rate, resulting in a decline in labour force participation.

High amounts of freebies have raised concerns over the fiscal sustainability of states. Most of the states have stretched finances and limited revenue resources, which forces them to borrow in order to provide freebies. This leads to increasing debt, fiscal deficit, and inflation, which undermines their economic stability. A very direct correlation can be observed between the amount of electoral freebies and fiscal deficit over the past 13 years.

Freebies are not just complicated from an economic point of view, but they also have high opportunity costs, since the same funds could have been utilised for long-term infrastructure and human development projects. Freebies create distortions in market prices, thus reducing incentives for private investments, ultimately leading to fewer jobs, slower revenue growth, and higher taxes.

The given table shows that these states have an exorbitant debt to GDP ratio, reaching up to 47% in Punjab, and a national average of 28%. Despite this, the percentage of GDP allocated to capital expenditure remains as low as 2.2% This indicates that the current budgetary structure, though seemingly attractive to the public in the short run owing to high revenue expenditure by the government, is not sustainable from a long term perspective.

The Way Forward

Brazil launched a system of conditional cash transfers called Bolsa Família, in which payments are tied to conditions, such as children being vaccinated or receiving schooling. This helps ensure a more efficient mechanism since both short-term and long-term needs are taken care of at the same time. India’s giveaways, on the other hand, usually do not have such checks and balances, which limits their effectiveness in bringing about structural change. 

There is also a need to ensure transparency as well as accountability in the implementation of the welfare policies and schemes. Political parties should be mandated to reveal the financing and tradeoffs associated with freebies to both the public and the Election Commission of India prior to their announcement. The Election Commission of India should be bestowed with greater powers to regulate and monitor the distribution of freebies by political parties during elections. 

A periodic assessment of such policies is crucial, not just to understand their economic implications, but also the broader picture, since many of these policies are aimed at more than just attracting votes. For instance, since the Delhi government provided water supply free of charge up to 20,000 litres, many families deliberately reduced their water usage under the 20,000 limit, which eventually reduced water usage of Delhi by 15-20%.

Conclusion

Public opinion on freebies is divided. As parties continue to promise such benefits to voters, analysing the implications of such policies becomes crucial. Ultimately, in a democracy, it is the voter who has the power to block or allow freebies, and hence, educating them on their long-term impact becomes all the more crucial.

Political pledges and exorbitant freebies promised by political parties cannot be entirely prevented. However, strict regulations must be in place to ensure that such promises remain largely reasonable and consistent with the welfare goals.

In a democracy like ours, the implications of such a culture pose significant questions in the long term regarding social advancement, governance, and budgetary sustainability. India must adopt a holistic approach as it moves forward, addressing the challenges brought about by this freebie culture. This should involve promoting financial restraints on parties, establishing robust governance structures, and emphasizing long-term investments in infrastructure, healthcare, and education.

CITATIONS

Shukla, N. (2025). FREEBIE CULTURE IN INDIA. In the International Journal of Advanced Legal Research, International Journal of Advanced Legal Research (Vol. 5, Issue 3). https://www.ijalr.in/

Free cash transfer to women across states. (2024). In The Row Over Handouts (p. 13).

Bharat, E. (2025, February 14). The Freebies competition in Indian politics: a deepening crisis. ETV Bharat News. https://www.etvbharat.com/en/!opinion/the-freebies-competition-in-indian-politics-a-deepening-crisis-enn25021403439