SC Flags Fiscal Risks Of Freebies

Top court questions sustainability of poll-time welfare schemes

February 19, 2026: The Supreme Court of India on Thursday voiced strong oral reservations over the growing trend of state governments announcing so-called “freebies” ahead of elections. A bench comprising Chief Justice of India Surya Kant, Justice Joymalya Bagchi and Justice Vipul Pancholi made the observations while hearing a petition filed by Tamil Nadu Power Distribution Company Ltd challenging Rule 23 of the Electricity Amendment Rules, 2024. The Court questioned how long such practices would continue and cautioned that unchecked largesse could harm the nation’s long-term economic health.

During the hearing, the bench remarked that indiscriminate distribution of state benefits without assessing genuine need amounts to appeasement and is not aligned with sustainable development. The judges referred to recent elections where welfare schemes were announced shortly before polling and raised concerns over the long-term impact of direct cash transfers, asking whether such measures could discourage employment. Chief Justice Surya Kant observed that while it is the state’s duty to provide support, fiscal prudence must be maintained, especially when several states are running deficits.

Clarifying that the issue was not confined to any single state, Justice Bagchi stressed the need for structured financial planning and transparent budgetary justification for welfare outlays. He suggested that governments should clearly outline expenditure on unemployment and other schemes within formal budget proposals. Although the matter arose in the context of electricity rules, the Court’s remarks have reignited the broader national debate on election-time welfare promises and fiscal responsibility.