Development will be hampered: Supreme Court raps states for 'irresponsible' freebie

The Supreme Court of India has sharply criticised states for announcing “irresponsible” freebies that strain public finances, questioning the timing and fiscal logic of such decisions while hearing a matter related to electricity subsidies.

The court specifically asked the Government of Tamil Nadu to explain why a free-electricity scheme was announced at the last minute, leaving power distribution companies (DISCOMs) scrambling to adjust tariffs and budget calculations.

Observing that many states are already running revenue deficits, the bench questioned how governments could afford large subsidy commitments without prior fiscal planning. It warned that unchecked largesse could hamper the nation’s economic development.

The court noted that had the subsidy been announced in advance, DISCOMs could have factored it into tariff planning and financial projections. Sudden policy decisions, it said, create arbitrariness and disrupt regulatory processes.

It also pointed out that bodies such as the Appellate Tribunal for Electricity and power distribution firms are responsible for determining tariffs, and last-minute subsidies make it difficult for them to accurately price electricity and maintain financial stability.

- Ends

Tune In