Freebies vs Welfare India: Sanjeev Sanyal, a member of the Prime Minister's Economic Advisory Council (EAC-PM), recently advised governments to be cautious, drawing a clear distinction between welfare schemes and political "freebies." He says that wrongly implemented subsidies and generous pension schemes can place a heavy financial burden on future generations.

In an interview with ANI, Sanjeev Sanyal said that a social safety net is essential in any risk-taking economy. “Where there is risk, failure is also inevitable. Whether it's a startup or a small grocery store, risk exists at every level. In such a situation, society must provide a safety net for those who stumble,” he said.

The poor should get a ladder to climb up

Sanjeev Sanyal clarified that he is not against providing assistance to the poor. “I am in favor of providing some facilities to the poor so that they get an opportunity to move forward. I have no problem with that,” he said. However, he also added that it is wrong to assume that everyone will automatically rise up simply by relying on economic growth.

'Trickle-down' needs support

According to Sanyal, the trickle-down theory works, but it doesn't reach everyone. “The benefits of development reach the bottom, but not everyone.” Therefore, we need ‘assisted trickle-down,’ meaning we need to create pathways for people to move up and help those who are unable to climb the ladder on their own.”

Questioning Universal Freebies

Sanjeev Sanyal expressed his displeasure with untargeted freebies.  Giving examples, he questioned schemes like free bus travel for women. “This is not targeted. A poor man is just as entitled to public transport as a woman. These schemes are not well-designed welfare programs, but freebies,” he argued that subsidies should be based on economic need, not just identity (gender or class).

Old Pension Schemes Could Become a Major Threat

Sanjeev Sanyal issued a serious warning regarding the old, generous pension schemes. He said that such schemes could cripple government finances in the future. “You are essentially placing a huge liability on the next generation,” Sanyal explained. India's working-age population will start declining in about 25 years. In such a scenario, schemes that pay pensions from current earnings will become unsustainable. “When the number of working people decreases, and the number of pensioners increases, the system will not be able to survive,” he said.

Need to Learn from Europe

He cited the example of Europe, where the aging population is putting immense pressure on the pension system. “In many European countries, the retirement age is being raised to 70 or 75. In France today, the number of pensioners is greater than the number of working people,” Sanyal said.
Sanjeev Sanyal also warned young government employees not to blindly trust the old pension schemes. “You will pay taxes for 35 years, but when your turn comes, there might be no money left in the system. The math clearly shows that this model doesn't work,” he added.

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