Unintended consequences of reining in freebies

The Election Commission of India should be careful when altering the rules of the election game

The ongoing “freebie” debate reached an important milestone this week. The Election Commission of India (ECI) wrote to political parties on Tuesday, soliciting their views before amending the model code of conduct (MCC) to include fiscal implications of promises made by parties in election manifestos. This issue of freebies got more attention after Prime Minister Narendra Modi recently spoke about it and the Supreme Court decided to hear petitions related to the matter. As the ECI has noted, the existing guidelines under the MCC do require political parties and candidates to explain the rationale of promises made and the possible ways to finance such promises. But parties make routine declarations and do not provide enough information. Thus, the proposed change will seek more details.

The format presented, for instance, expects parties to declare the extent of coverage of promises in terms of individuals/households, along with expected expenditure. Parties will be expected to provide details regarding all such promises separately. They would also need to show the expenditure required to fulfil all electoral promises. Besides, parties will be expected to show how such promises will be financed — either by increasing revenues or rationalising expenditure, supplemented by broad details under these heads. The focus on government finances and an attempt to bring more information into the public domain should be welcomed in principle. However, the ECI’s proposal needs to be evaluated carefully.

It is likely that demanding such detailed information would put opposition parties in a disadvantageous position. For example, there is nothing to stop a party in power from implementing any scheme — subject to the approval of the Assembly or Parliament, as should be the case — before the MCC is implemented. But if an opposition party promises a similar scheme, it will need to provide details in terms of how the plan would be financed. Further, to furnish information in such detail, all political parties would need to have expertise in fiscal issues, which is often lacking even in the government. Besides, it is not clear how the ECI will view this level of information. It neither has nor is expected to have such capabilities. Thus, the ECI should move cautiously on this front and make sure that the level playing field, which is an absolute necessity in a democracy, is not disturbed.

Moreover, the issue of freebies or, more broadly, that of fiscal management is not limited to the time of elections. Parties in power often follow or introduce schemes to improve their chances of re-election. While expenditure or expected revenue loss is approved by lawmakers, both in the states and at the Centre, they are not always equipped to evaluate the longer-term implications of such programmes. Therefore, it is important to have an independent fiscal body that has the expertise to evaluate Budget provisions, both for the Centre and the states, depending on its design, on an ongoing basis. Successive finance commissions recommended setting up such an institution. This would not only empower legislators but also inform the public in general about fiscal issues. Although its recommendations would not be binding on governments, a more informed public discourse will influence decisions. To be fair, the poll panel or courts are not in a position to address the issue of fiscal responsibility. Governments and legislatures at both levels will have to take the lead.