Finance Minister Nirmala Sitharaman on Thursday hit out at Delhi Chief Minister Arvind Kejriwal for giving a "perverse twist" to the debate on freebies, saying the AAP leader putting education and health in that category is an attempt to create fear in the minds of the poor.

A day after Kejriwal joined the debate on freebies, calling for a referendum on spending taxpayers' money on healthcare and education, Sitharaman said spending on these two has never been called or classified as freebies since Independence and to drag them now in this debate is to give it a "perverse twist".

"Delhi Chief Minister has given perverse twist to the debate on freebies. Health and education have never been called freebies," she told reporters here.

"No Indian government has ever denied them since Independence. So, classifying education and health as freebies, Kejriwal is trying to bring in a sense of worry and fear in minds of poor," she said.

Prime Minister Narendra Modi has in recent days hit out at the competitive populism of extending 'rewaris' (freebies) which are not just wastage of taxpayers' money but also an economic disaster that could hamper India's drive to become atmanirbhar (self-reliant).

His comments were seen directed at parties like the Aam Aadmi Party (AAP) which have in the run-up to assembly election in states like Punjab and more recently Gujarat promised free electricity and water, among others.

Earlier this month, the Supreme Court had suggested setting up a specialised body to examine "irrational freebies" offered to voters during elections.

The Centre told the Supreme Court on Thursday that the "freebie culture" has been elevated to the level of "art" for fighting elections and will lead to "disaster" if some political parties understand this is the only way to deliver public welfare measures.

Sitharaman said there has to be a genuine debate on the issue and everyone should participate in it.

In a detailed rebuttal to the Delhi chief minister's comments on freebies, government sources said no one has stated that free benefits to the poor is wrong. But it is also wrong to classify the loan write-offs as being freebies, or to say that corporate tax rate cut was designed to benefit the corporates.

They went on to point to free ration and cooking gas being provided to the poor to buttress the government's stand.

The Centre is of the view that there is no justification for political parties offering freebies such as free electricity and water, and that the exchequer cannot afford it and it will eventually lead to bankruptcy of states.

States should look at their coffers before giving freebies to citizens, sources said, adding they should not harm state finances.

Sources also cited higher spending on the rural employment guarantee scheme -- the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), as well as fuel and fertiliser subsidy.

On allegations of lowering outlay on the MGNREGA, sources said the government is fully committed to increase allocation should the demand arise, as it had done earlier.

On Kejriwal's charge of GST being levied on essential food items like rice and wheat flour, they said states like Punjab imposed taxes on such commodities and the recent levy is an exercise to curb tax evasion by well-known brands.

Countering the barb of Rs 10 lakh crore loans being waived of super-rich friends of BJP, sources said debt write-offs are not waivers.

Write-offs, they said, are technical requirements as per the RBI, and the recovery process continues.

RBI data shows that not only has the amount written off by public sector banks fallen since 2018-19, the money recovered from written off accounts has increased over that period, they said, citing action against wilful defaulters.

On reduction in corporate tax rate, they said total corporation tax collections in 2019-20 did decline by about 16 per cent to Rs 5.57 lakh crore. But the decline was about Rs 1 lakh crore and not Rs 1.45 lakh crore, as was feared at the time.

The tax collection figures for 2020-21 are not relevant because of the Covid impact, sources said, adding the latest provisional unaudited numbers with the Controller General of Accounts show that in 2021-22, corporation tax collections rose to Rs 7.12 lakh crore, surpassing by a good margin the collections made in 2018-19 when the tax rate was cut.

On the allegation of Union government reducing share of states in devolution of taxes, sources said as per the recommendations of 14th Finance Commission, the Centre has increased the states' share in central taxes to 42 per cent from the earlier 32 per cent. This has been retained under the 15th Finance Commission as well.

In fact, the Centre has been transferring the devolution amount to states in advance, sources said. This has been done thrice so far, the latest of which was on Wednesday when the Centre released two instalments of tax devolution to state governments amounting to Rs 1,16,665.75 crore, as against the normal monthly devolution of Rs 58,332.86 crore.