**Executive Summary**
This document is an answer provided by the Minister of State for Finance (Shri Pankaj Chaudhary) in response to Unstarred Question No. 1272 in Lok Sabha on December 8, 2025, concerning the impact of "freebies" promised by political parties. The question addresses their impact on the government exchequer, inflation, and the Reserve Bank of India's (RBI) ability to manage inflation and stability.
**Key Points / Main Content**
* **Impact of Freebie Promises on Government Exchequer and Inflation:**
* Mere promises by political parties do not burden the government exchequer or increase inflation.
* **RBI's Inflation Management:**
* Proactive monetary policy responses and supply-side measures have helped lower inflation.
* Headline CPI inflation was provisionally 0.3% (year-on-year) in October 2025, the lowest in the current CPI series (2012=100) and below RBI's inflation target band of 4±2%.
* **Impact of Freebies on Forex-Rate, Inflation-Rate, and Unemployment-Rate:**
* RBI, NITI Aayog, and the Ministry of Statistics and Programme Implementation have not commissioned any official studies or reports documenting the impact of freebies on these rates.
* An RBI Bulletin article from June 2022 identified rising expenditure on non-merit freebies as a source of fiscal risks for heavily indebted state governments.
**Impact Analysis**
* **Government and Ministry of Finance:**
* **Impact:** The response clarifies the government's position on the immediate financial impact of political promises. It also highlights measures taken to manage inflation and acknowledges potential fiscal risks associated with freebies.
* **Action Required:** No specific action required based on this statement.
* **Reserve Bank of India (RBI):**
* **Impact:** Acknowledgment of the RBI's efforts to manage inflation and reference to the RBI's research on potential risks associated with non-merit freebies.
* **Action Required:** Continue monitoring the fiscal risks confronting state governments in India.
* **NITI Aayog and Ministry of Statistics and Programme Implementation:**
* **Impact:** Their lack of commissioned reports on the specific impacts of freebies is noted.
* **Action Required:** N/A
* **State Governments:**
* **Impact:** The information highlights that rising expenditure on non-merit freebies could pose fiscal risks, especially for heavily indebted states.
* **Action Required:** To be mindful of the rising expenditure on non-merit freebies.
Key Entities Referenced
Reserve Bank of India (RBI): Referenced as potentially facing difficulty in keeping inflation low and stable, and as having published an article about fiscal risks confronting state governments in India.
NITI Aayog: Referenced in connection to studies or reports on the impact of freebies, though no official studies were commissioned.
Ministry of Statistics and Programme Implementation: Referenced in connection to studies or reports on the impact of freebies, though no official studies were commissioned.
Ministry of Finance: The Ministry to which the question about 'freebies by political parties' is addressed.
Government of India
Ministry of Finance
Department of Economic Affairs
LOK SABHA
UNSTARRED QUESTION NO. 1272
MONDAY, DECEMBER 8, 2025/AGRAHAYANA 17, 1947 (SAKA)
FREEBIES BY POLITICAL PARTIES
1272. Shri Shyamkumar Daulat Barve:
Will the Minister of FINANCE be pleased to state:
(a) whether it is true that promises of freebies by political parties burdens the Government
exchequer and increases inflation, if so, details thereof;
(b) whether it is true that Reserve Bank of India (RBI) is facing difficulty in keeping inflation
rate low and stable, because Government expenditure is high and fiscal deficit increases as
a result of free facilities provided to public, if so, the details thereof; and
(c) Whether it is a fact that as per RBI, NITI Aayog and Ministry of Statistics and Programme
Implementation, promising freebies on the eve of elections leads to increase in forex-rate,
inflation-rate and unemployment-rate in the country, if so, the details thereof?
A N S W E R
MINISTER OF STATE FOR FINANCE (SHRI PANKAJ CHAUDHARY)
(a) Mere promises by political parties neither burden the Government exchequer nor increase
inflation.
(b) Proactive monetary policy responses coupled with effective and prudent supply side
measures by the government helped in lowering inflation. According to latest data release,
headline CPI inflation was 0.3 per cent (year-on-year) in October 2025 (provisional), which is a
historic low in the current CPI series (2012=100). This is well below RBI’s inflation target band
of 4±2 per cent.
(c) There are no official studies or reports commissioned by RBI, NITI Aayog and Ministry of
Statistics and Programme Implementation that document the impact of freebies on forex-rate,
inflation-rate and unemployment-rate in the country. However, in June 2022, an article was
published in RBI Bulletin on “...fiscal risks confronting state governments in India, with
emphasis on the heavily indebted states”. This article identified “…rising expenditure on non-
merit freebies” as one of the emerging new sources of risks.
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