Context:Vice-President Jagdeep Dhankhar’s Call for Debate:
- Criticized the culture of “freebies” and called for a structured national policy on government investments.
- Emphasized that capital expenditure (capex) is crucial for economic growth, and electoral allurements can burden future governments.
Relevance : GS 2(Governance )
- Subsidies & Global Comparison:
- Stressed that subsidies should be direct, transparent, and without intermediaries, as practiced in developed nations like the U.S.
- Cited the example of U.S. farm subsidies, where direct transfers ensure that farm household incomes exceed general household incomes.
- Context of the Debate:
- Came in response to Samajwadi Party MP Ramgopal Yadav’s demand to increase MPLADS funds from ₹5 crore to ₹20 crore per year due to rising construction costs.
- Yadav highlighted that MLAs in Uttar Pradesh get ₹5 crore, while Delhi MLAs have ₹10 crore for constituency development.
- Fiscal & Policy Implications:
- The demand for higher MPLADS funds reflects the need to adjust for inflation and rising project costs.
- The proposal to exempt MPLADS funds from GST suggests concerns over effective utilization of funds for development.
- The broader issue of freebies vs. targeted welfare remains a critical fiscal and governance challenge.
Relevance
- Economic Perspective :
- Freebies can strain public finances, affecting long-term growth.
- Direct Benefit Transfers (DBT) align with fiscal prudence and targeted welfare.
- Governance & Policy:
- Need for a structured national policy to regulate government investments and avoid unsustainable populism.
- Parliamentary discussion could shape future fiscal policy and subsidy reforms.
- Electoral & Political Considerations:
- Freebies often serve as electoral incentives, impacting fiscal discipline.
- Governments face challenges in balancing welfare with economic sustainability.
