Freebies have become a significant determinant of electoral outcomes in India lately; it dominated the recently held poll campaign in Delhi, where on February 8, voters revealed that the freebie culture was not appealing to them. The ruling party in Punjab, Aam Aadmi Party (AAP), terms welfarism, what BJP decries as ‘ready’ politics bringing no real empowerment to the poor and marginalised while pushing the national capital towards financial distress. AAP has been in power in one of Delhi’s neighbouring states, Punjab, since 2022. The fiscal report card shows that the situation in Punjab is not what is shown to be. With A debt of Rs 2.63 lakh crore on the state, a revenue deficit of Rs 12,554 crore, and a fiscal liability of Rs 24,352 crore, the Aam Aadmi Party (AAP) is facing a mammoth challenge due to its promised freebies.
Punjab-based experts are of the view that the state government’s escalating debt burden is mainly due to the under-mobilisation of potential resources, their imprudent and discretionary use of money, irrational freebies, untargeted subsidies, financial mismanagement and misdirected development priorities over the past decades.
The growing trend of Indian politicians offering freebies and cash handouts has sparked a nationwide debate. Critics argue that while these measures may be politically effective, they undermine fiscal discipline and shift focus from long-term governance to short-term electoral gains. From free electricity and water to cash incentives for women and farmers, the promises made during the 2022 state elections reflect an escalating arms race in populism. As political leaders vie for votes, monthly cash transfers, subsidised gas cylinders, and free education have become central to party manifestos. The allurement of freebies is such that it has led to wage stagnation and income inequality in the state.
Unlike the neighbouring state of Himachal Pradesh, which had withdrawn the power subsidy given to the people to get financial help from the 16th Finance Commission, Punjab said it would continue to give free electricity to the agriculture sector and up to 300 free units of power to the domestic sector. Punjab’s free power bill has crossed Rs 20,200 crore this fiscal. However, the government is not planning to withdraw free electricity schemes soon, so there is no significant immediate relief to the exchequer. Finance Commission’s chairman, Dr Arvind Panagariya, said 95 per cent of Punjab’s subsidy is being used to provide free power.
The state government is already grappling with free travel facilities for women in public sector buses that have cost the exchequer Rs 600 crore this year, and state-owned transport bodies are crying foul. Punjab has also been paying Rs 650 crore yearly for free travel for women. Another freebie promised by the Aam Aadmi Party before the elections was Rs 1,000 monthly to all women voters. However, it remained a non-starter. The freebie will cost the state Rs 12,000 crore annually, burdening it even further. However, the government fiscal health report reveals that it is not in a position to roll out its promised free services.
The report titled ‘Fiscal Health Index 2025’ ranked states for 2022-23, covering 18 major states that drive the Indian economy in terms of their contribution to India’s GDP, demography, total public expenditure, revenues, and overall fiscal stability.
This report released on the Fiscal Health Index (FHI) for 2022-23 by the NITI Aayog, the country’s top think tank, has confirmed the worst fears of policymakers in Punjab. The once most progressive state in the country is now the most laggard, with the worst FHI.
It has become crucial to define the terms and scope of freebies. It becomes very subjective; what is a freebie for one person may appear to be welfare to another. The academia and civil society have been in a state of inertia and complacency, while the general public has been happy with freebies and subsidies. All this, along with institutional inertia, results in policy paralysis. The picture is not rosy in the years to come. Under debt, liabilities, and freebies’ burden, Punjab is struggling to float fiscally.
