The Supreme Court on Thursday launched a scathing attack on the growing culture of populist handouts, or 'freebies', by state governments, warning that such indiscriminate largesse is hampering the country's economic development and eroding the work ethic.
A bench comprising Chief Justice Surya Kant and Justices Joymalya Bagchi and Vipul M. Pancholi made the strong observations while hearing a plea from the Tamil Nadu Power Distribution Corporation Ltd. The state-owned firm had challenged Rule 23 of the Electricity Amendment Rules, 2024, in connection with its proposal to provide free electricity to all consumers, irrespective of their financial status.
The court questioned the rationale behind universal handouts, arguing that welfare measures must be targeted to protect the vulnerable, not used as a blanket policy that also benefits the affluent.
"What kind of culture are we developing in India?" the Chief Justice asked. "It is understandable that as part of a welfare measure, you want to provide for those who are incapable of paying electricity charges. But without drawing a distinction between those who can afford and those who cannot, if you start distributing, will it not amount to an appeasing policy?"
The bench emphasized that while supporting the poor is the state's constitutional duty, extending the same benefits to those who can afford to pay creates a distorted policy framework. "There are children who cannot afford education. Then the state must provide... But those who are affluent, any kind of freebie first comes to their pocket. Is it not high time for states to revisit these policy frameworks?" the CJI remarked.
The court's ire was specifically directed at the timing and fiscal planning of such announcements. The bench questioned why the Tamil Nadu government had announced the free electricity scheme at the "last minute," which left power distribution companies scrambling to adjust their tariffs and financial projections.
Noting that most states in the country are revenue-deficient, the court demanded to know how governments could afford such large subsidy commitments. "Not a single penny is left for development because of such policies by state governments," the court told the Tamil Nadu government. "It is the problem of all states, not just yours."
The CJI proposed a fiscal benchmark, suggesting that at least 25% of a state's revenue should be used exclusively for development work. "States are running into deficit but still giving freebies. See, 25 per cent of the revenue you collect in a year, why can it not be used for the development of the State?" he observed.
Beyond the fiscal implications, the Supreme Court raised a fundamental question about the societal impact of freebies. The judges warned that an unchecked distribution of benefits could disincentivize the workforce.
"The states should work to open avenues for employment," the CJI stated. "If you start giving free food from morning to evening, then a free cycle, then free electricity... then who will work, and then what will happen to the work culture?"
Justice Joymalya Bagchi stressed the need for structured financial planning over impulsive giveaways, suggesting that if states wish to distribute benefits, they should "put it in your budgetary allocation and justify how you will do so" . He added that states, instead of focusing on long-term development projects, often limit themselves to just two functions—paying salaries and distributing largesse.
The court clarified that its concern was not confined to Tamil Nadu but reflected a pan-India trend driven by electoral politics. The observations come against the backdrop of a heated political debate, where "freebies" have become a major poll issue. While the ruling BJP has accused opposition parties of trying to buy votes with "revdis" (free handouts), opposition parties have defended such schemes as essential welfare measures to ease the burden on common citizens in the face of inflation and joblessness.
The Supreme Court's remarks echo concerns raised in the recent Economic Survey 2025-26, which warned that the rapid expansion of unconditional cash transfers could strain state finances and crowd out crucial growth-enhancing public investment.
Ultimately, the court directed the Tamil Nadu government to file a reply explaining its funding sources for the promised free electricity and issued a notice to the central government, ensuring that the contentious debate over the balance between welfare and fiscal prudence will continue to be scrutinized by the highest court.
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