New Delhi, Feb 19 The Supreme Court on Thursday criticized the practice of offering freebies and subsidies before elections, stating that it was "high time" to revisit such policies that hinder the country's economic development.
The court observed that the ultimate financial burden of these populist measures falls squarely on taxpayers, and questioned, "But who will pay for this money that the state says it will provide now? This is taxpayers' money."
This observation came during the hearing of a petition filed by the Tamil Nadu Power Distribution Corporation Limited, which proposed to provide free electricity to all consumers, regardless of their ability to pay.
"It is understandable that some people cannot afford it. Some people cannot afford education or basic necessities. It is the state's responsibility to provide. But if these freebies are only benefiting those who can afford them, is that not a problem?" the CJI asked.
The bench, also comprising Justices Joymalya Bagchi and Vipul M Pancholi, warned that indiscriminate distribution of benefits is hindering the nation's economic development and straining state finances.
"It is high time that all political leaders and parties revisit these policies. We cannot continue to provide these benefits indiscriminately. There needs to be a balance. But for how long can this continue?" the CJI asked.
The state-owned firm is challenging Rule 23 of the Electricity (Amendment) Rules, 2024, which imposes strict financial discipline on power distribution companies.
The challenged rule stipulates that the difference between the approved cost of supplying electricity and the tariff actually collected from consumers should not exceed 3%, and that this gap must be cleared within a fixed timeframe.
The DMK-ruled Tamil Nadu is holding assembly elections this year.
The Supreme Court, which has issued notices to the Centre and others on the Tamil Nadu firm's petition, stated that it is understandable for states to assist those in need.
"Yes, some people cannot afford it. Some people cannot afford education or basic necessities. It is the state's responsibility to provide. But if these benefits are only going to those who can afford them, is that not a problem?" the bench asked.
"Most of the states in the country are facing revenue deficits, yet they are offering these freebies without considering development," the bench said.
The bench clarified that it is not singling out Tamil Nadu, but rather addressing a pan-India issue. "What kind of culture are we creating? What is the difference between those who can afford to pay their electricity bills and those who are marginalized? It is understandable that, as a welfare state, you want to provide relief to the marginalized. But if you start giving benefits without any distinction, will that not be a form of appeasement?" the CJI asked.
He added that due to these populist measures, most state governments are focusing on two things: distributing benefits and paying salaries and funding other development projects.
"State governments should focus on creating jobs, building roads and hospitals, so that the poor are protected... but instead, we are giving cash, free rations, free kerosene, and free cycles to everyone in the name of welfare schemes," the CJI said.
The bench questioned why the Tamil Nadu firm suddenly decided to loosen its purse strings after the electricity tariff was announced.
The CJI stated that in some states, even large landowners receive free electricity, allowing them to keep their lights and machines running without cost. "If you want a facility, you have to pay for it," he said.
Senior advocate Gopal Subramaniam, representing the Tamil Nadu firm, argued that there must be equity in the allocation of resources, and that the growing gap between revenue and expenditure is a matter of governance.
Justice Joymalya Bagchi raised concerns about fiscal planning and regulatory processes, particularly in the context of electricity subsidies.
"After the tariff has been announced, the state government suddenly decided to provide more benefits," he said, adding, "If you really want to do all this, allocate it in the budget and then justify how you will do it."
Justice Bagchi also raised concerns about governments intervening after tariffs have been fixed by statutory regulators, such as electricity commissions.
He observed that such interventions could introduce arbitrariness into fiscal administration and undermine the role of independent regulatory bodies.