8. Judicial Scrutiny of Freebies: Balancing Welfarism and Fiscal Prudence

On February 19, 2026, a three-judge Bench of the Supreme Court, led by Chief Justice of India (CJI) Surya Kant, raised serious concerns over the \'indiscriminate\' distribution of freebies by State governments. The court questioned whether such \'largesse\' amounts to an \'appeasement policy\' that ignores the financial health of the public exchequer and hampers long-term national development. Core Legal and Fiscal Concerns • Indiscriminate Distribution: The Court criticized the lack of distinction between the \'haves\' and \'have-nots,\' noting that affluent sections often benefit from freebies (like free electricity) intended for the marginalized. • Fiscal Deficit vs. Largesse: CJI Kant pointed out that even revenue-deficit States continue to splurge on items like scooties, clothes, and food near elections, leaving insufficient funds for infrastructure, roads, and hospitals. • Impact on Work Culture: The Bench warned that direct cash transfers and excessive free services could erode the nation\'s work culture and reduce individual motivation to earn a dignified livelihood. • Budgetary Transparency: Justice Joymalya Bagchi suggested that all such expenditures must be transparently reflected in budget proposals and justified as \'planned expenditure\' rather than post-tariff interventions. • Electricity Sector Stress: The observations arose during a challenge by TNPDCL against Rule 23 of the Electricity (Amendment) Rules, 2024, which mandates that tariffs must be cost-reflective to prevent unsustainable revenue gaps. • Universal Principle: The Court reiterated a fundamental economic principle: those who can afford a facility must pay for it to ensure the financial viability of public utilities. Key Definitions • Freebies: Public welfare measures provided free of charge, often as short-term electoral promises (e.g., free gadgets, debt waivers), distinguished from long-term welfarism.• Welfarism: Sustained state efforts to build human capital through essential services like education, healthcare, and food security (PDS). • Rule 23 (Electricity Rules, 2024): A regulation requiring that the gap between a utility\'s approved revenue requirement and its actual revenue from tariffs must not exceed 3%, ensuring fiscal discipline in the power sector. • Revenue Deficit: A situation where the government\'s net realized revenue is less than its total estimated expenditures. Constitutional & Legal Framework • Directive Principles of State Policy (DPSP): Articles 38 and 39 mandate the State to secure a social order for the promotion of public welfare and ensure equitable distribution of resources. • Article 21 (Right to Life): The Court clarified that providing education and healthcare is a fundamental duty under the right to a dignified life, distinguishible from \'irrational largesse.\' • Article 282: Grants the Union or a State the power to make grants for any public purpose, even if not within their respective legislative domains, though this is often debated in the context of freebies. • Subramaniam Balaji vs. Govt. of Tamil Nadu (2013): A previous ruling where the SC held that promises in election manifestos do not amount to \'corrupt practice\' under the RPA, 1951, though the current Bench is revisiting the fiscal implications of this logic. UPSC Relevance • GS Paper II: Constitution of India; Welfare schemes for vulnerable sections; Separation of powers between various organs; Role of the Judiciary. • GS Paper III: Indian Economy and issues relating to mobilization of resources; Government Budgeting; Infrastructure (Energy); Fiscal policy and debt sustainability. • Prelims Focus: DPSP (Articles 38-41), Electricity Act 2003, Difference between Revenue and Capital expenditure, and the \'Cost-Reflective Tariff\' concept. Conclusion The Supreme Court’s intervention signals a shift toward \'fiscal constitutionalism.\' While the judiciary recognizes the State’s duty to extend a \'helping hand\' to the poor, it emphasizes that \'appeasement\' through taxpayers\' money at the cost of schools and hospitals is a regressive path. The challenge lies in defining a clear legal boundary between essential \'Welfare\' and populist \'Freebies\' to ensure that India\'s journey toward a $10 trillion economy is not derailed by short-term electoral math.