Supreme Court slams poll-time freebies, warns states against fiscal 'irresponsibility'

The observations came during a hearing on electricity subsidies, where the court raised concerns about the strain such last-minute decisions place on public finances.

The bench underlined that several states are already grappling with revenue deficits, making sudden subsidy commitments financially risky.

It cautioned that unchecked populist measures could undermine long-term economic stability and development.

Tamil Nadu asked to explain power subsidy

During the proceedings, the court sought an explanation from the Government of Tamil Nadu over the timing of a free-electricity scheme.

The court questioned why the subsidy was announced abruptly, leaving power distribution companies struggling to recalibrate tariffs and financial projections at the eleventh hour.

The court observed that had such subsidies been declared in advance, distribution companies could have factored them into tariff planning.

Sudden policy shifts, it said, introduce arbitrariness and disrupt regulatory processes critical to the power sector’s stability.

Impact on DISCOMs and tariff regulation

The bench noted that tariff determination is the domain of power regulators and institutions like the Appellate Tribunal for Electricity.

Last-minute subsidies, it observed, make it difficult for these bodies to price electricity accurately and ensure financial viability for distribution companies.

Such ad hoc decisions, the court warned, risk pushing utilities deeper into debt, ultimately affecting service delivery and burdening state exchequers.

Court questions freebie culture

Addressing senior advocate Gopal Subramanium, appearing for Tamil Nadu, Surya Kant questioned whether it served public interest for governments to absorb the full cost of expansive subsidies.

He stressed that the issue was not confined to one state but reflected a broader national trend driven by competitive freebie politics.

The Chief Justice also raised a pointed question on policy culture, asking whether indiscriminate benefits—extended without distinguishing between those who can afford to pay and those who cannot—were truly welfare-driven.

While acknowledging the state’s duty to support the vulnerable, the court cautioned that blanket subsidies without clear eligibility criteria risk becoming appeasement measures rather than targeted relief.