The proliferation of “freebie” culture by state governments is one of the most contested practices within India’s constitutional fiscal architecture. It gives rise to an intense constitutional and economic debate concerning the proper limits of federal intervention. This paper examines the tension between the fiscal emergency powers of the Union and the constitutional guarantees of fiscal federalism afforded to states in resource allocation. Drawing upon theories of fiscal federalism, this paper interrogates whether, and to what extent, the Union may legitimately act when state expenditures disturb macroeconomic stability and threaten to precipitate a fiscal emergency. The Constitution of India provides certain fiscal oversight tools—Article 293 (state borrowing limits), Article 360 (financial emergency), and Article 280 (Finance Commission)—however, these mechanisms are structurally inadequate and politically constrained in addressing the systemic problem of competitive electoral welfare promises that erode fiscal discipline. The paper further identifies a critical research gap: the absence of a clear legal standard for distinguishing constitutionally permissible welfare expenditure from fiscally reckless populism. Through doctrinal analysis, comparative constitutional study, and judicial review, the study critically evaluates the adequacy of existing constitutional tools and proposes an institutional framework for structured Union intervention. The study concludes by proposing a principled framework for Union intervention grounded in legal principles, democratic accountability, and rights-based public finance governance. It recommends the establishment of a Fiscal Stability Council at the state level, reform of Article 293 conditionalities, and a legislative framework that codifies the boundary between legitimate welfare and reckless populism.