Free comes at a 'price', says CEA Nageswaran

Chennai: Chief Economic Advisor (CEA) V Anantha Nageswaran on Monday cautioned against the growing dependence on free or heavily subsidised public services, saying "free is the most expensive word in public policy" as it weakens infrastructure, distorts economic incentives and burdens public finances.

Addressing the CII Tamil Nadu Infrastructure Summit 2026, Nageswaran said providing essential utilities below cost creates the illusion of affordability but ultimately leads to poor maintenance, inefficient resource use and underinvestment. "The thing we call free is the thing we destroy. This is not a paradox, it is a policy choice," he said.

Using water as an example, the CEA argued that free supply primarily benefits households with existing piped connections, while poorer families without access often pay much higher prices to private tanker operators. Fair pricing, he said, would enable governments to directly support vulnerable sections while ensuring utilities generate enough revenue to expand services.

He stressed that infrastructure always carries a cost, whether paid by users, taxpayers or through the gradual deterioration of assets due to inadequate maintenance. Such pricing distortions also discourage long-term private investment, he added, noting that capital is "not sentimental" and will flow only to financially viable projects offering predictable returns over 20-30 years.