RBI MPC member Ashima Goyal said freebies are never free and subsidies are harmful.
RBI Monetary Policy Committee (MPC) member Ashima Goyal on Sunday made a statement on freebies which is likely to upset many political parties if not all. She said that freebies are never free and whenever political parties make such offers to the public, they must be required to make the financing and trade-offs clear to voters.
She further added that such a freebie culture would lead to a reduction in the temptation towards “competitive populism’.
Goyal said that whenever freebies are offered, the cost has to be adjusted somewhere else, but it is worth incurring for public goods and services that build capacity.
“Freebies are never free… especially harmful are subsidies that distort prices,” she told PTI in an interview.
noting that this hurts resource allocation and production and imposes large indirect costs, such as the water table falling in Punjab due to free electricity. She believes such freebies come at the cost of reducing the quality of air, water, and health and hurt the poor the most.
“Revadi Culture”
Prime Minister Narendra Modi was recently in the news for calling freebies ‘revdi culture’ and slamming political parties offering such to garner votes. He also said that such schemes would be a burden on taxpayers’ money and could hamper India’s growth.
His comments were directed at the Aam Aadmi Party, who earlier this year won a huge majority in Punjab and are contesting Gujarat elections, the Prime Minister’s home state, later this year.
The Aam Aadmi Party has been aggressively campaigning in Gujarat for the forthcoming assembly elections.
During a rally last month, the Aam Aadmi Party national convener, Arvind Kejriwal, promised jobs and 300 units of free electricity every month for the people of Gujarat. He promised the implementation of free electricity within three months of forming the government.
Chief Minister Arvind Kejriwal earlier this month conducted an online briefing and alleged that some people are trying to create an atmosphere against free government schemes like free education and free healthcare by terming them “free ki revdi.”
His reaction was to the PM’s statement. He further said that the people who oppose the government’s free welfare schemes should be called “traitors.”
