Ahmedabad: Dr. Charan Singh, Chief Executive of EGROW Foundation during a debate on a news channel attacked the freebie culture of several state governments and said that sooner or later the public will have to bear the cost of such policies.

Dr. Singh a former IIM Bangalore faculty said, “Stop saying freebies, freebies, it’s a fraud since nothing is free. The government should inform the public that today we are giving you these freebies but will recover them from your children after ten years. Since we are giving this away for free by taking out a loan, your kids will bear the interest.”

As the government is providing you with free electricity without having any money in its coffers, ultimately you and your children will bear the burden in form of different taxes. It is therefore important for the public to know that free things are coming from other sources that will ultimately cost them, he added.

Dr. Singh, while emphasizing the difference between subsidies and freebies stated that “the subsidy is when the public gets grain but they add value to make it food, likewise for petroleum both government and public pay their respective part.”

“But freebies is giving 1000 rupees per month to women without the state having any money, so the state tends to increase the number of alcohol shops to get more funds, Punjab is an example of this. This way the government can increase its fund inflow, but the public’s productivity will decline,” he added.

So it is very important to see that in a race to give freebies and subsidies the government does not raise money from unproductive sources.

The former non-exec. chairman of Punjab & Sind Bank Punjab also highlighted the fact that Punjab has a committed expenditure (salary, pension, and interest) of 50% of the receipts, so how will the new policy come? he asked.
Furthermore, if you see these freebies announced are 2.7% of Punjab’s state GDP, which is more than the revenue deficit. So if these freebies will be given after taking loans that will lead to economic disaster.

“Some states make announcements without thinking of repercussions, Punjab’s debt to GDP ratio is over 50% which is the highest among all the states so in these situations they have to take loans to run the state.
The revenue expenditure of Punjab is 90% of its capital expenditure which means all borrowing goes into expenditure and no new income is generated sending the state into a debt trap,” Dr. Singh added.

Prof. Singh also stated that Rajasthan, Andhra Pradesh, and Kerala are also facing a similar financial crunch as Punjab. So states like such are dependent on the center and if the center doesn’t give them funds, they will collapse financially.

In the end, Dr. Singh said that “if you are not doing capital expenditure, you are not doing investment which means compromising on future growth.”

The center should make a policy to cap the freebies because, in the end, the states go to the union government for the funds in a time of financial crunch, he suggested.

DeshGujarat