The Supreme Court on Thursday strongly criticised states over pre-election freebies. Moreover, the bench questioned how governments would fund development while distributing free utilities. The trigger came from Tamil Nadu’s proposal to offer free electricity to all consumers.
Notably, the scheme did not distinguish between financial categories. Consequently, the court raised concerns about fiscal discipline and long-term sustainability.
Tamil Nadu Scheme Sparks Sharp Questions
Tamil Nadu’s government proposed free electricity irrespective of income level. Therefore, the court examined whether such subsidies burden public finances. The bench noted that states already face budget deficits.
Chief Justice Surya Kant asked how states would fund infrastructure if they continue subsidies. He questioned the broader culture emerging across India. He remarked that states now offer free food, cycles, electricity, and even direct cash transfers.
He warned that indiscriminate distribution risks rewarding inactivity. Furthermore, he emphasised that welfare should target those unable to pay.
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Welfare vs Indiscriminate Distribution
The Chief Justice clarified that genuine welfare remains essential. For example, states must support children who cannot afford education. However, he questioned why affluent individuals also receive benefits.
He asked whether states should revisit policy frameworks urgently. Additionally, he stressed that at least one-fourth of state revenue should support development.
Even revenue-surplus states, he said, must prioritise hospitals, schools, and infrastructure. Instead, he observed that states distribute benefits during election periods.
The court told Tamil Nadu that such policies leave no money for development. Importantly, the bench said the issue affects all states.
Judicial Concerns Over Fiscal Responsibility
Justice Joymalya Baghchi addressed planned and unplanned expenditure. He suggested that states include such schemes in budget allocations transparently. Furthermore, he said governments must justify spending plans clearly.
Earlier in January, Chief Justice Surya Kant called freebie spending an important issue. He warned that unchecked largesse could burden future generations.
He differentiated between welfare measures and excessive electoral giveaways. Additionally, the court in February 2025 cautioned that such policies may create a “class of parasites.”
Justice BR Gavai had earlier referenced Maharashtra’s “ladki bahin” scheme. That scheme provided ₹1,500 monthly to eligible women aged 21 to 65. He remarked that election-time freebies reduce willingness to work.
Political Row Over Freebies
Prime Minister Narendra Modi criticised opposition parties for distributing “revdis.” Meanwhile, opposition leaders defended welfare spending. They argued that taxpayer funds can improve lives amid inflation and job concerns.
What Is the Case About?
The court heard a writ petition from Tamil Nadu. The state seeks to quash Rule 23 of the Electricity Amendment Rules 2024. It called the rule arbitrary, unreasonable, unconstitutional, and violative of Article 14.
Rule 23 regulates the gap between approved Annual Revenue Requirement and projected tariff revenue. The court noted that advance announcement could help power firms adjust finances.
However, sudden policy shifts disrupt regulatory systems and create arbitrariness. Therefore, the bench directed Tamil Nadu to explain funding sources for free electricity. The court also issued notice to the Centre.
