That political parties use welfare schemes and direct financial benefits to attract voters and win elections is no secret. Incentives to different segments of the economy are just as common, but while these can contribute to economic development and job creation, electoral freebies can push states into debt.

Take some of the states that went to the polls this year, for instance. In Tamil Nadu, the Tamilaga Vettri Kazhagam (TVK) government has waived farm loans of up to ₹50,000 for 1.42 million farmers. In West Bengal, the Bharatiya Janata Party (BJP) is implementing unemployment allowances and financial support for women and senior citizens as part of election commitments. In Kerala, the Congress-led United Democratic Front (UDF) promised ₹1,000 monthly assistance for college-going girls and free bus travel for women. All these parties were swept to power in the respective states - and no doubt the freebies helped.

Free electricity and water, welfare benefits for women and children, unemployment allowances, direct financial assistance to poor families and farmers, free laptops for students, free food grains, and healthcare benefits are commonly described as "freebie politics". Such promises have become a major electoral weapon.

Excessive generosity in both giving and receiving ultimately imposes significant costs on society, governments, and public institutions.

Several economic institutions, policy experts, and industry bodies have criticised the trend, arguing that these commitments weaken fiscal discipline and create long-term burdens on state finances.

Polls Coming Up, Freebies Too

Assembly elections are scheduled in seven states next year. Goa, Manipur, Punjab, Uttarakhand, and Uttar Pradesh are expected to vote in February-March, Himachal Pradesh in November, and Gujarat in December.

Political parties in these states have already begun preparing their electoral strategies, including welfare and freebie agendas. Election manifestos and campaign narratives are likely to once again feature extensive promises of free benefits.

The Gujarat government is also expected to introduce nearly a dozen new policies during the election year - and discussions have already begun on schemes aimed at attracting women and youth voters.

State government spokesperson and Minister Jitu Vaghani said that with the Vibrant Gujarat Global Investors Summit scheduled for January 2027, the government will roll out several pending, and new policies in a phased manner. The proposed Agro Business Policy, for which a draft has already been prepared, will also be part of this policy package.

Rising Debt, Hurting Economy

The Reserve Bank of India (RBI), in several reports, has expressed concern over rising non-productive expenditure by states.

Former RBI Governors Raghuram Rajan and Duvvuri Subbarao have warned that excessive freebies could lead to mounting state debt. Members of NITI Aayog have also argued that a clear distinction must be maintained between welfare measures and election-oriented freebies.

Excessive spending on free benefits at the cost of productive investments can slow economic growth.

Perhaps the most significant transformation in Indian electoral politics over the past decade has been the rise of "revdi” or freebie culture.

Elections are supposed to be contested on issues such as development, roads, water supply, education, and employment. Today, in many states, free electricity, free bus travel, subsidised LPG cylinders, free laptops, and monthly cash assistance to farmers, women, and youth have become central campaign themes.

Since 2015, almost every major election in India has witnessed large-scale promises of freebies. While these promises have proven electorally effective, they have also raised serious concerns about rising public debt, fiscal deficits, and reduced developmental expenditure.

Vote-Buying Politics

The Confederation of Indian Industry (CII) has repeatedly cautioned against rising state debt and subsidy-driven politics, urging governments to focus more on infrastructure creation and employment generation.

Economist Arvind Panagariya has described freebies as an economically unsustainable model, arguing that employment creation and productive investments are far more effective tools for poverty reduction.

Economist Surjit Bhalla has gone further, characterising freebies as a form of vote-buying politics and advocating greater emphasis on developmental expenditure.

Cost Across 14 States

In the four states and one Union Territory that held assembly polls in 2026, promises worth nearly ₹1.70 lakh crore were made.

A report published in November 2025 estimated that freebie and welfare assistance schemes implemented across 14 states over the previous two years resulted in an expenditure of nearly ₹2 lakh crore. The estimate was provided by economists at Axis Bank.

In some states, the cost of freebies and subsidies has reached between 0.1% and 2.7% of Gross State Domestic Product (GSDP).

The RBI has also noted that free electricity and similar benefits have contributed significantly to the debt burden of state power distribution companies.

‘A Serious Economic Policy Matter’

The strongest observations have come from the Supreme Court of India. During hearings on petitions challenging election-time freebies, the Court described the issue as a "serious economic policy matter" requiring wider debate.

The Court observed that while providing education, healthcare, nutrition, and social security to the poor is a constitutional obligation of the state, a distinction must be drawn between genuine welfare measures and election-oriented giveaways.

Policymakers, the Court suggested, should undertake a comprehensive study of the issue. Ultimately, the cost of free benefits is borne by taxpayers and future generations.

On April 20, the Supreme Court issued notices to the Central government, the Election Commission of India (ECI), and the Comptroller and Auditor General (CAG) on a Public Interest Litigation (PIL) seeking a ban on irrational freebie announcements by political parties ahead of elections.

The petition argued that promises or distribution of freebies from public funds as electoral inducements should be treated as bribery and a corrupt practice under Section 123 (1) of the Representation of the People Act, 1951.

Flip Side: Relief For Poor

Supporters of such schemes argue that they provide immediate relief to poor and middle-class families, enhance women's empowerment, and promote social justice.

Economist Hemant Kumar Shah, for instance, says while political parties' promises of financial giveaways put a significant burden on state finances, the ₹16 lakh crore in bank loan write-offs over the past decade also represent a major economic loss.

He said that bank loan waivers may benefit only 2,000-3,000 borrowers, whereas schemes such as providing food grains at highly subsidised rates of ₹2 per kilogram impose an annual burden of around ₹70,000 crore but also benefit nearly 90 million people.

Schemes such as Ladli Behna in Madhya Pradesh and Maharashtra have transformed women into one of the most influential voter groups. Earlier, free electricity, free water, and free bus travel for women in Delhi became major electoral issues, creating welfare expectations that successive governments have continued to follow.

Today, almost every major political party in India has adopted some form of populist politics, shifting electoral competition from a development-based model to a direct-benefit model. But the debt burden it entails should be lost on none.