Introduction
The Supreme Court of India on Thursday expressed serious concern over what it described as a growing “freebie culture” among State Governments, cautioning that indiscriminate welfare distribution ahead of elections may undermine long-term economic development and fiscal discipline.
The observations were made during the hearing of a writ petition relating to electricity regulation, but the Bench’s remarks extended to broader questions of governance, public finance, and the constitutional boundaries of welfare policymaking.
The Bench and the Case
The matter was heard by a Bench comprising Chief Justice of India Surya Kant, along with Justices Joymalya Bagchi and Vipul Pancholi.
The proceedings arose from a writ petition filed by Tamil Nadu Power Distribution Company Ltd (TANGEDCO) challenging Rule 23 of the Electricity Amendment Rules, 2024. While arguments focused on regulatory and fiscal implications of electricity subsidies, the discussion broadened to State policies absorbing electricity bills and extending universal benefits.
Senior Advocate Gopal Subramanium, appearing for the State, faced pointed questions from the Bench regarding the sustainability and economic targeting of such schemes.
Judicial Concern Over Universal Subsidies
The Court questioned the rationale behind extending blanket subsidies without distinguishing between economically vulnerable citizens and those capable of paying for services.
Chief Justice Surya Kant observed:
“What kind of culture are we developing?”
The Bench warned that distributing benefits to all sections of society, irrespective of financial status, risks becoming an “appeasing policy” rather than a targeted welfare measure.
Constitutional Dimensions
The Court’s remarks raise significant constitutional questions relating to:
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Article 14 – Equality before law and the need for rational classification in welfare distribution.
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Directive Principles of State Policy (Part IV) – Particularly the State’s obligation to promote welfare while ensuring equitable distribution of resources.
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Fiscal federalism and responsible budgeting under Articles 266 and 293 concerning public finance and borrowing powers.
While the Constitution envisions India as a welfare state, judicial scrutiny suggests that welfare must be structured, targeted, and fiscally sustainable.
Welfare vs. Fiscal Prudence
The Bench underscored that while support for marginalised communities is essential, unchecked largesse could:
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Strain public finances
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Increase fiscal deficits
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Divert resources from infrastructure, education, healthcare, and employment generation
In a pointed remark concerning direct cash transfers and universal benefits, the Chief Justice observed:
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