The resounding victory of the Aam Aadmi Party (AAP) in the Delhi polls has engendered various debates among political circles as well as the citizenry. While the opposition parties have to learn a lot from the way the Arvind Kejriwal-led AAP strategised it approach to the campaign, some crucial questions arise — Is it the state government’s welfare policies that saved the day for AAP and is it a replicable model for the rest of India?
In 2019, the Narendra Modi-led Bharatiya Janata Party (BJP) touched the magical figure of 303, thanks to some of its welfare policies such as Ujwala and Ayushman Bharat. However, the Government of India is finding it hard to meet both ends due to the fiscal constraints.
At the same time, India is not unfamiliar with the welfarist models followed by many states during the 1980s and 1990s, and how they helped political parties win elections time and again, deteriorating the fiscal health of these states.
Given this, there’s a need to assess the nature of AAP’s welfare policies in practice.
Delhi records the highest per capita income in India, and it is thirteenth among the states with respect to the size of the GSDP. The state has a service sector (85 percent) dominated GSDP of more than Rs 7 lakh-crore. The Comptroller and Auditor General (CAG) reports that from 2015 the AAP government has maintained a revenue surplus. During this time, as promised in its 2015 manifesto, the AAP government allocated more money for education, health and infrastructure.
Instead of targeting a particular section of the society, the freebies and discounted rates were offered for water and electricity utility provisions for the majority in effect. In the case of electricity, a robust DISCOMS structure which already existed helped the government estimate the usage and prevent leakages — crucial for the sector savings.
In the case of water, the scheme envisaged incentivising users for metering the quantity used. In the education sector, the main focus has been on the improvement of teaching and learning environment, and not only on the infrastructure that made a significant impact by winning the trust of the parents in the government schools. Without going into the granularities of the budget spending, it could be observed that the schemes are introduced after a thorough study on the content and programme side, than merely allocating money as seen in the case of many other states.
Here comes the very fundamental difference of Delhi with respect to the other states in India. Delhi could be considered as a real aspirational state of affairs for a local municipal corporation with Aravind Kejriwal as its CEO mayor. The Delhi area is the biggest market in the country in terms of its valuation and size. The highest per capita income in the vicinity of an urban agglomeration of the highest consumption with a revenue surplus (not much expenditure is expected for the primary sector in Delhi, unlike the other states) in a municipal corporation area is a dream of any mayor. Moreover, in this case, the mayor has more powers and resources to dispose of in comparison with the other cities.
The PRS Legislative analysis of the 2019-20 budget shows that the total revenue receipts for 2019-20 are estimated to be Rs 50,017 crore, an increase of 11.6 percent over the revised estimate of 2018-19. This is based on the total budget expenditure of Rs 60,000 crore for Delhi for the year 2019-20. Of this, Rs 43,300 crore (86.5 percent of the revenue receipts) would be raised by the state through its own resources, and the Centre would devolve Rs 6,717 crore (13.5 percent of the revenue receipts) in the form of grants. It shows that the context of Delhi is different from many other states in India, and for them to replicate the model will be a fiscal challenge.
The development in Delhi necessarily leads to the argument of the need for a strong city-state in India. The Modi government’s policies have taken India back to the socialist and welfare model of the 1970s. The success of AAP in Delhi might strengthen the argument of more spending for subsidies of the public schemes at the state and central level. What is missing in this discussion is the size and structure of the Delhi government in delivering what they had promised. It acted like a city-state led by a powerful mayor. One could wish that debates would lead to the strengthening of local self-government as the future of India lies there.
This article was published in Money Control on February 18, 2020 click to read
Views expressed by the author are personal and need not reflect or represent the views of Centre for Public Policy Research.