Freebies: Impacts on the economy

 Er. Bibhash Deva Nath

(The author can be reached at bibhashdevanath@gmail.com) 

Governments have often resorted to announcing freebies in order to win over the hearts and minds of their citizens. These freebies can range from subsidized food grains and free healthcare to monetary benefits and even technology devices. The central as well as various state governments in India have also been known to announce such freebies from time to time, especially during election seasons. While on the surface, these freebies may seem like a boon for the citizens and a way to improve their standard of living, they can also have both positive and negative impacts on the economy.

One of the biggest positive effects of the government announcing freebies on the economy is that it can act as a stimulus for the economy. When people are given certain benefits for free, it not only helps them save money but also has a multiplying effect on the economy. For example, when the government announces free food grains for the poor, it not only helps alleviate hunger and malnutrition but also frees up funds for the families to spend on other necessities. This increased spending can stimulate demand and boost economic growth. Similarly, free healthcare can help people save on medical expenses, allowing them to spend more on education and other important areas.

Moreover, these freebies can also have a positive impact on the overall well-being of citizens. For instance, when the government provides free education and healthcare, it can help improve the literacy rate and the health of the population. This, in turn, can lead to a more educated and healthy workforce, which is crucial for the growth of any economy. Additionally, freebies such as technology devices like tablets or laptops can also help bridge the digital divide and provide equal opportunities for all, especially in a country like India with a large population.

However, on the flip side, there are also negative effects of the government announcing freebies on the economy. The most significant downside is the strain it can put on the government’s finances. Announcing freebies means that the government will have to allocate a significant portion of its budget towards these schemes, which can lead to a budget deficit. This budget deficit can have adverse effects on the economy, such as inflation, higher interest rates, and a decrease in investments, ultimately hindering economic growth.

Additionally, freebies can also create a culture of dependency among citizens. When people start to rely on the government for everything, it can lead to a decrease in productivity and a lack of motivation to work hard. This can hinder economic growth in the long run. Moreover, the government may prioritize announcing freebies over investing in critical sectors such as infrastructure and healthcare, which are crucial for the overall development of the country.

Apart from the economic effects, there are also other consequences of the government announcing freebies. One of them is the misuse and corruption that can occur in the distribution of these freebies. In a country like India, where corruption is prevalent, there have been instances where these freebies have not reached the intended beneficiaries. This not only undermines the purpose of these schemes but also creates a sense of distrust among the citizens towards the government.

While the government announcing freebies may have some positive effects on the economy, it is crucial to carefully consider the negative consequences as well. Instead of using it as a tool for garnering votes, the government should focus on creating policies that promote inclusive and sustainable growth. This can be achieved by investing in crucial sectors such as education, healthcare, and infrastructure while also providing opportunities for employment and entrepreneurship. Ultimately, the development of a country cannot solely depend on the government’s freebies but rather on well-planned and executed long-term policies that benefit the entire population.