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Polity & Governance
Mahesh

19/08/22 10:25 AM IST

Supreme Court not in favour of derecognising political parties over freebies

In News 
  • The Supreme Court recently refused to consider the question of derecognising political parties who resort to freebies.
Welfare V/s Freebies 
  • Free electricity, free water, free public transportation, waiver of pending utility bills and farm loan waivers are often regarded as freebies
  • They potentially undermine credit culture, distort prices through cross-subsidisation eroding incentives for private investment, and disincentive work at the current wage rate leading to a drop in labour force participation
  • Welfare: Expenditure on which brings economic benefits, such as the public distribution system, employment guarantee schemes, states’ support for education and health.
Measures 
  • There is a need to spend more resources on welfare schemes
  • There’s a need to keep track of allocations to the social sector.
  • Public expenditure efficiency: At the same time, it is high time we started talking about public expenditure efficiency in this country.
  • Better resources: We need to have a good tax framework, where you have much better resources for more social sector expenditure while also ensuring medium-term debt sustainability.
  • The court has mentioned the need to balance welfare spending and our fiscal concerns.
  • The implicit subsidies can be reduced so that we have more resources for welfare or social sector expenditure.
Welfare Spending in India 
  • Studies, especially by the Reserve Bank of India (Study on State Finances), have shown that from 2014 onwards, the social sector expenditure at the State level has been declining even after States were given more resources.
  • The allocation to the health and education sectors by the States is declining.
  • The Reserve Bank of India report: two months ago brought to light the fiscal situation of the States.
  • At least five States are going to see fiscal pressure.
  • Welfare spending in India is woefully low.
  • It is low in comparison to other developing countries – some years ago, public spending on health and education was 4.7% in India, compared to 7% in sub-Saharan Africa.
Source- The Hindu 

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