India’s Supreme Court delivered one of its sharpest judicial rebukes yet of the country’s growing “freebies” culture on Thursday, warning that indiscriminate welfare handouts risk weakening work incentives and undermining long-term economic development.
Hearing a petition linked to Tamil Nadu’s state-run power utility, the court said it was time to re-examine policies that offer universal subsidies without assessing whether beneficiaries can afford to pay. While acknowledging the legitimacy of targeted support for the poor, the bench questioned the political logic and fiscal sustainability of blanket giveaways.
Supreme Court questions states’ “freebies” policies amid fiscal stress
The observations came as the Supreme Court took note of a plea by Tamil Nadu Power Distribution Corporation Ltd, which has proposed to provide free electricity to all consumers irrespective of their financial status.
“Most of the states in the country are revenue deficit states and yet they are offering such freebies” overlooking development, the bench said.
The bench comprised Chief Justice Surya Kant and Justices Joymalya Bagchi and Vipul M Pancholi.
“What kind of culture are we developing in India?” court asks
During the hearing, the court drew a distinction between welfare assistance for those unable to pay and universal benefits that include financially secure households.
“What kind of culture are we developing in India? It is understandable that as part of the welfare measure you want to provide to those who are incapable of paying the electricity charges,” the bench asked.
“But without drawing a distinction between those who can afford and those who cannot, you start distributing. Will it not amount to an pleasing policy,” the CJI asked.
The remarks reflect a broader concern among policymakers and economists that competitive populism is increasingly shaping state budgets, often at the expense of infrastructure, job creation and other growth-linked investments.
Court warns freebies can harm economic development and work culture
The Supreme Court said the country’s economic development was being hampered by what it described as “large distribution”, arguing that governments should prioritize job creation rather than expanding universal handouts.
The bench said states should work to open avenues for employment instead of giving free food, cycles, electricity to all.
“The states should work to open avenues for employment. If you start giving free food from morning to evening then free cycle, then free electricity then who will work and then what will happen to the work culture,” the CJI said.
The court also noted that states often end up spending disproportionately on salaries and subsidies rather than development projects.
The bench said states, instead of spending on development projects, do two jobs – paying salaries and distributing such largesse.
Tamil Nadu power firm challenges Electricity Amendment Rules, 2024
The comments were made while the court considered a plea by the DMK government-led power distribution firm, which has challenged a provision under the Electricity Amendment Rules, 2024.
The Supreme Court, however, issued notice to the Center and others on the petition.
The bench also questioned the timing of the Tamil Nadu utility’s push for expanded free electricity, asking why it had decided to loosen the purse strings after the electricity tariff was notified.
The court’s intervention lands amid an intensifying national debate over the cost of welfare promises, the political incentives behind universal subsidies, and the long-term risks of financing such programs in revenue-deficit states.
