The Supreme Court on Wednesday gave the Union government the go-ahead to assemble a panel of experts to consider the advantages and disadvantages of government freebies as well as methods for reducing extravagant election pledges that are costly to the exchequer. The committee may consider the matter and provide a report, it was stated.
According to the SC, the panel could include Niti Aayog, the RBI, the Indian Election Commission, the Finance Commission, as well as ruling and opposition parties and other interested parties.
Political parties' habit of promising voters free goods and services in exchange for their votes, according to a bench chaired by Chief Justice NV Ramana, raises “serious economic difficulties” that affect policy and all stakeholders, including “taxpayers and beneficiaries.”
The court's comments came as Union government Solicitor General Tushar Mehta remarked “mindless” freebies and populist promises by political parties often lead to “economic disasters”. He suggested that the Election Commission should re-examine the issue.
On August 11, the dispute will be heard again by the top court, at which point the Centre will clarify its position.While tax devolution is a state's inalienable right, NK Singh, the chair of the most recent (15th) Finance Commission (FC) and the head of the committee that recommended capping the general government debt at 60% of GDP, recently told FE that the FC could be one of the institutional mechanisms to regulate spending on freebies, which undermine the basis of macroeconomic stability. He said that reducing giveaways and off-budget liabilities could be related to the revenue deficit assistance given to states.
