Freebie / Revri Debate: It’s not a binary, there is much more than what meets our eyes

It was not so long back that the freebie debate lighted up India’s political landscape. PM started talking about the “Revri culture”, and his online and offline followers flooded the discourse with how bad it is and how it is going to destroy the finance of the country.

The media joined in which is expected. But surprising were the comments from the Chief Economist of the State Bank of India, the central ministry bureaucrats, and the Chief Economic Advisor of India, who found transgressions only from the non-BJP-ruled states. But not a word on the free food given to 80 crore Indians — for example.

The debate is not for any fiscal prudence, but rather to gain political advantage. It started with the Aam Admi Party offering free water and electricity in Delhi, and in many ways, the voters expressed their satisfaction with the schemes through the ballot. AAP said they are returning what the citizens rightfully deserve for the taxes they paid, and claimed their corruption-free administration helped finance them. The opposition opposed it, calling it cheap politics, which will make people greedy in the short term, lazy in the long haul, and ultimately destroy the development focus.

But over time, this was explicitly adopted/advertised by all the other parties. Though the likes of Dravidian parties have been practicing this for decades (and have development outcomes to showcase), the ones like TMC and JDU, who already had them in their repository became more vocal. And then it was adopted in grand style by the grand old party, in Karnataka. Congress swept the election, and Karnataka became the model on offer by the party.

BJP was different. Though it is the biggest practitioner of freebie politics through free foodgrains, houses, etc. it portrayed it as development (though how food is development and water is not, nobody bothered to explain). But like everything else, the freebies also have an expiry date, and the marginal benefits for central freebies started declining fast.

Now we need to remember the irony of the debate, the central freebies are also funded by the states, as ultimately the tax players stay there. And there lies the crux of the political slugfest, who will take the credit for the freebies — the centre or the state?

AAP showed that if we can connect schemes to everyday needs like water and power, and also improve the traditionally inaccessible healthcare and education, the results are visible. While these are not new in India (been there for a long time in Kerala and Tamil Nadu), credit must go to AAP for bringing the narrative to the Hindi heartland.

Anyway, for all practical purposes, it seems that the voters have seen through the internet contractions of the Revri issue, and understood that everyone is offering it, and it benefits them. If we look around and see the campaign for the upcoming five assembly elections it will well be clear.

But even if we keep the politics aside, a broader question remains — why is it that a large number of affluents feel only the poor get the freebies, but the affluent do not? Hence, many among them feel great resentment above it and want it to be stopped.

Let us start with the question, what freebie (or Revri as some are calling it)?

As a state India is responsible for decent living standards for all its citizens. And this aligns with our professed philosophy of the welfare state. So the state is expected to provide education, health, infrastructure, and other services for all the citizens to have an affordable and respectable life. This can’t be considered as part of a freebie or reverie in all practical services.

An attempt has been made to categorize the subsidies into two categories — Merit and Non Merit.

Merit includes the following;

- Elementary education

- Secondary education

- Health

- Water supply, sanitation, housing, and urban development

- Food

Non-merit includes the rest, including fertilizer and petroleum, both of which are provided by the federal government.

A lot of angst of the middle class, especially the affluent ones comes from these visible subsidies. Most of us has privatized our life, with almost no dependence on the government. We go to private schools and hospitals, work in private companies guarded by private security, stay in private layouts, drive our private cars, and hop inter-city/ country using private airlines. And when we need something to be done with a government agency (like registration of a property, or a driving license or RC book, we outsource it to a “consultant”).

It is hence not a surprise many of us are swayed by the “narrative” that while we pay the taxes, someone is accruing the benefits for free. These make the recipient lazy and greedy, which in turn affects the availability of labor and economic development.

But if I say that all of us are beneficiaries of subsidy, and artificial depression of a class of people so that our food is cheap, maybe many will be a shade surprised.

So let us take the factor inputs of the agricultural sector:

Fertilizers last year INR 225,000 crores. This entirely goes into food production.

Electricity — INR 91,000 crores

Irrigation — INR 17,500 crores

Crop insurance — INR 13,000 crores

Price Support — INR 24,000 crores

Loan waivers (in 2017–18) — INR 122,200 crores

Please note that all these are helping keep the price of the food grains low for us, and indirect subsidy for everyone — unless we are consuming only imported food.

And we are not even adding the cost of water depletion that is enabled by free power, and aggravated by some of the water-intensive crops like sugarcane and paddy.

And I am not even talking of continued suppressed MSP that the government determines, while not following the Swaminathan committee reforms. This keeps the agricultural class perennially underprivileged. The income for agricultural and non-agricultural labor, which had a broad parity at the time of independence is hugely lopsided now. The agricultural labor now on average earns one-fourth of the non-agricultural average.

The relative poverty among roughly half of the population, who depend at least partially on agriculture for livelihood, also necessitates the so-called freebies so that they can at least have a life with some dignity.

If we now take the agriculture debate beyond food, where all of us are a beneficiary but possibly almost none are even aware, let us take a case where possibly the affluent do not accrue direct benefits.

Take for example the free bus travel for all women in Karnataka, anywhere in the state, in any public bus (barring a few which are luxury/ AC), any number of times.

The scheme was painted as a drain by many in the beginning. When the media reported that women in groups were traveling around the state for pilgrimage, the naysayers were encouraged.

But soon enough there were reports about how more women were joining the workforce, and/ or saving money for productive deployments like nutrition for children. That is a benefit for society, especially when women’s participation in the workforce is at a record low.

But how does it benefit the affluent? Well in many ways. For example, more women are willing to work, which means more availability in the labor market. And on top of that, if that woman is more fulfilled while being able to provide for some more needs at her home, that will show up in her output.

In summary, the freebie/reverie debate is much more complex and nuanced than we think. And given its present structure, we all benefit from it — though the scale differs.

It is important that we understand this, and don’t fall for political propaganda. That will enable more nuanced discussions for better interventions with subsidies, with better outcomes.