Freebies row: Poll promises should be met via budgetary provisions, says FM

Weighing on the ‘freebies’ debate, Finance Minister Nirmala Sitharaman on Friday said promises made to people by political parties during elections should be met through budgetary provisions, duly passed in the state Assemblies.

“If a promise has been made to the people at the time of election because you are looking at quid pro quo, then as a responsible party, after you come to power, make a provision in the budget for it,” the finance minister said at a media event in Mumbai.

“And, the payment should go through from the provision made in the budget. The promise of a freebie cannot be burdened on somebody else,” she added.

Meanwhile, the apex court has asked a three-judge Bench to review a past order on the issue, which said that such handouts are not a corrupt practice.

The matter reached the Supreme Court when it admitted a public interest litigation (PIL) seeking a crackdown on irrational freebies. The debate started with the Prime Minister saying political parties are promoting a “revdi culture” which is detrimental for the development of the country.

“This is an important issue for India to debate and all of us should join the debate. We have expressed our views from the government’s side,” Sitharaman said.

“It is one thing to empower people and provide them all kinds of assistance to make sure that they can come out of that mire and be able to do their own things afterwards. But it’s totally a different thing when you talk about it from a sense of entitlement,” she said.

Speaking on the Reserve Bank of India’s (RBI’s) discussion paper on whether charges should be levied on Unified Payments Interface (UPI), the finance minister reiterated the ministry’s stand, saying UPI is viewed as a public good.

“People should be able to access it freely so that digitisation of the Indian economy becomes attractive for people. And, through digitisation, we achieve a level of transparency, which is required. Therefore, we still think it’s not time for charging it. We have taken a position that we shall provide budgetary support if there are any requirements for supporting it,” she said.

The RBI had asked if UPI transactions are charged, then should the merchant discount rate (MDR) be imposed based on the transaction value. Or, should a fixed amount be charged as MDR, irrespective of the transaction value.

Further, it has sought feedback on whether the RBI should decide on the charges, or the market be allowed to determine if charges are introduced at all. The RBI also sought feedback from stakeholders on the possibility of imposing a “tiered” charge on payments made through the UPI, based on different amount bands.

“The fact that we have brought in the ONDC itself underlines that we are pushing more and more towards open digital transactions, communication and platforms, which can enable greater access,” Sitharaman said.

Commenting on the issue of cess, the minister said, the central government collects them with an objective. In fact, the collected cess goes to the states.

“There is no one domain where the Centre is sitting and saying this is exclusively mine.

Over Rs 1 trillion, which was given for education in this year’s Budget, would not have been possible but for the education cess,” she said.

The finance minister also said it is not time yet to throw caution to the wind as far as the economy is concerned. It is because there are downside risks which continue to prevail. The downside risks are of an extraneous nature.

“Therefore, our exports have to be ready to face them and we will have to see how best our exports are supported so that they are not really facing the headwinds all by themselves,” she said.