Don’t burden utilities, pay for freebies from budgets, says FM Nirmala Sitharaman

Union Finance Minister Nirmala Sitharaman on August 26, 2022 said political parties that come to power on pre-poll promises of freebies should pay for those through budgetary provisions.

Citing the example of free electricity being promised in many States, the finance minister said the burden for the freebies should not be thrust upon the power discoms or gencos.

“If a promise has been made to the people at the time of the election, you are looking at a quid pro quo. You should be, as a responsible party, assume after you come to power, make a provision in the budget for it,” Ms. Sitharaman said, speaking at the FE Best Bank Awards event here.

She said in the case of the power sector, there have been cases where states have paid the utilities in parts or not paid at all.

“You end up shifting the burden to the discom which has not gone to the election. The discom has not asked for votes. Why should they be burdened? Do they have the power to stop continuing the supply? And similarly the gencos,” she said.

“The debate is not about what constitutes a freebie, but if you have given a promise, provision for it,” she added.

The remarks come amid a heated debate on the subject of freebies, which have seen the BJP and Opposition parties like AAP being divided. Earlier, Ms. Sitharaman had blamed Delhi Chief Minister Arvind Kejriwal for giving a perverse twist to the debate.

Underlining that we should have a rigorous debate on the issue of freebies, Ms. Sitharaman suggested that the government supports deploying resources to aid one’s journey out of poverty and empowering people, but one should not look at such efforts as entitlements.

“This is an important issue for India to debate and all should join the debate,” she said.

Economy will grow at 7.4% this fiscal

Ms. Sitharaman said the Indian economy will grow at 7.4% in this fiscal and continue at the same level in the next fiscal as well.

“Our own estimates have also shown based on the developments, that we are definitely at that range…7.4 (per cent) and that level will continue even next year,” Ms. Sitharaman said, speaking at the FE Best Banks Awards event in Mumbai.

She said the International Monetary Fund and the World Bank have projected India’s growth to be the fastest for the next two fiscal years, and their estimates are in sync with that of the Reserve Bank of India as well.

The global situation continues to be challenging and it is not the right time to throw caution to the winds as yet, she said.

The export sector will face difficulties as the global growth slows down, and the government will work with such entities to face the headwinds, she said.

Meanwhile, underlining that we need a rigorous debate on the freebies side, but stressed that political parties making pre-poll promises should make budgetary provisions for taking care of the expenditures and not push the burden on other entities.

Ms. Sitharaman said power discoms and generating companies have been seen to bear the brunt of such freebies as they get paid in part or in some cases not at all, despite having no role to play in the announcements.