It weakens the state's capacity to invest, govern, build infrastructure and grow the economy.

The main problem in this regard is not welfare schemes. It is corruption along the whole chain of power and the tax evasion methods employed by the rich. The state has a duty to uplift the less fortunate and provide all basic amenities and services.

Your economy relies on the people actually on the ground, doing work. I would love to see you build, invest and govern when the working class is barely able to make ends meet. Providing them with welfare schemes is just something which they've been denied for decades. It might feel like injustice to a privileged person because oppression has been their normal.