International Journal For Multidisciplinary Research

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Freebies and Subsidies in India: Are They Leading to Fiscal Vulnerabilities?

Author(s) Dr. Meenal Preyas Annachhatre, Dr. Manasi Vilas Gore
Country India
Abstract Subsidies and freebies are tools, governments use to achieve economic and social objectives. They influence resource allocation, income distribution, and market outcomes. While subsidies aim to reduce costs and promote specific economic activities, freebies often cater to immediate political or social demands.
This paper examines the economic implications of subsidies and freebies, particularly in the context of India, and their effects on state budgets, fiscal health, and poverty alleviation. While subsidies are typically targeted financial transfers aimed at achieving specific policy objectives, freebies are indiscriminate handouts, often used as electoral tools. The study highlights the fiscal burden caused by freebies, which contribute to rising public debt, budget deficits, and market distortions. Although cash transfers and subsidies provide immediate relief, and can temporarily improve living standards but they often fail to address the root causes of poverty and can lead to long-term economic inefficiencies. In the context of a lack of credibility among political powers, political clientelism may crop up. The paper explores the concept of the poverty trap, and a sample case of ‘Ladaki Bahin Yojana’ used during the electoral campaign in the State of Maharashtra. The analysis calls for a balanced approach, advocating for targeted subsidies alongside broader development initiatives focused on education, job creation, and economic empowerment to foster long-term, sustainable growth.
Keywords Subsidies, freebies, fiscal burden, electoral campaign, poverty trap, sustainable growth, etc.
Field Sociology > Economics
Published In Volume 7, Issue 4, July-August 2025
Published On 2025-07-17
DOI https://doi.org/10.36948/ijfmr.2025.v07i04.51290
Short DOI https://doi.org/g9tz6s
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