"Freebies Are Never Free", Let Voters Know Impact: RBI Member

RBI Monetary Policy Committee Member said a cost is imposed somewhere when governments provide freebies, but this is worth incurring for public goods and services that build capacity.

Freebies are never 'free' and when political parties offer such schemes, they must be required to make the financing and trade-offs clear to voters, RBI Monetary Policy Committee (MPC) Member Ashima Goyal said on Sunday, adding this would reduce the temptation towards "competitive populism".      

Ms Goyal further said a cost is imposed somewhere when governments provide freebies, but this is worth incurring for public goods and services that build capacity.

"Freebies are never free... specially harmful are subsidies that distort prices," she told PTI in an interview.      

Noting that this hurts production and resource allocation and imposes large indirect costs, such as the water table falling in Punjab due to free electricity, Ms Goyal said such freebies come at the cost of low quality health, education, air and water that hurt poor the most.