Freebies can lead to fiscal disaster: 15th Finance Commission chief

Freebies are not the road to efficiency or prosperity, but a quick passport to fiscal disaster, 15th Finance Commission chairman N K Singh has cautioned.

Singh said both the economics and politics of freebies were deeply flawed.

"It is a race to the bottom. Indeed, it is not the road to efficiency or prosperity, but a quick passport to fiscal disaster," he said in his speech at the annual day function of Delhi School of Economics on Tuesday.


His comments assume significance in the backdrop of states such as Punjab announcing a free electricity scheme.

Singh said it was not how cheap the freebies are but how expensive they are for the economy, for life quality and for social cohesion in the long run.

"We must dread the thought of replicating the culture of competitive freebie politics. We must go to the route of achieving higher rates of economic growth. The race to efficiency is the race to prosperity," he said.

He said that freebies posed greater risk, especially for states with high debt ratios, citing the example of Punjab and Rajasthan.