Economic Highlights

New Delhi, 13 February 2015

AAP Promises

BIG DREAMS SANS REVENUE

By Shivaji Sarkar

Delhi votes the bizarre way. A high price-hit people, despite fall in inflation statistics, believed that the moon promised by Aam Admi Party would be delivered to them. It has a severe cost to the exchequer. The promised water, power, schools, primary health centres (PHC), free wi-fi, CCTV and pucca houses for shanty dwellers would cost the Delhi government a minimum of Rs 40,000 crore a year in addition to its annual budget of about Rs 40,000 crore.

The AAP, with the backing of the CPM in its poll campaign and drafting of the manifesto, has pandered well to the desires and disenchantment of the low-income group, who constitute over 60 per cent of the city State’s population. Ironically, the CPM-ruled States have not been able to do what it seeks AAP to do!

The promise of reduction to VAT smacks of rejection of goods and services tax (GST), a move formulated by West Bengal’s former Left Front Finance Minister Asim Das Gupta, who chaired the Central-government appointed committee. How would AAP government fund the welfare schemes with reduced revenue?

AAP’s own team had calculated that Delhi would have to shell out a subsidy of Rs 13,000 crore, nearly the city’s total development expenditure, to ensure a flat 50 per cent cut for household consuming up to 400 units, benefitting over 80 per cent consumers. This is what Arvind Kejriwal had tried to do during his 49-day rule. It would cost a subsidy of Rs 4,000 crore. And, what did he do? He paid Rs 1600 crore to the power distribution companies from the SC-ST welfare funds for about three months’ supply.

AAP's Rs.4,000-crore subsidy may hit construction of existing schools and hospitals. How would the State fund new 500 schools and colleges? The AAP says it would get land free from Delhi villages. The Delhi land-holders, who have voted against the dilution of the consent clause in the Land Acquisition Act, would provide the land free!

Assuming that land would come free, the construction of rudimentary paraphernalia for the schools even at a modest Rs 5 crore per school would cost Rs 2500 crore. The salary of teachers, administrative staff would cost a minimum of Rs 7 lakh per school – Rs 35 crore a month, Rs 17500 crore a year. The AAP says it has a different model possibly that of “shiksha mitra” (teacher friend), very low-paid part-time contractual teachers appointed by many States. Even that would cost at least half of the estimate.

Each of the promised 900 PHCs requires land or space. Each PHC is presumed to have at least 5 persons to man, including at least two doctors, a male and a female. Approximately, the salary bill itself should be around Rs 5 lakh a month and modestly another Rs 5 lakh for other expenses – total Rs 10 lakh a month, if it does not have to pay rent and give medicines. It would cost Rs 90 crore a month or Rs 1080 crore a year. Actual expenses would be almost triple or over Rs 3000 crore a year.

The cost of adding 20,000 beds in hospitals even at Rs 1000 a bed would come to around Rs 200 crore initially and the additional 40,000 manpower would cost at least Rs 2000 crore a year.

Water was another poll plank which the AAP has cashed in on. According to Census 2011, about a quarter of the city's 1.30 crore population does not get treated piped water. The party promises to provide 700 litres of water daily to every household. Assuming a kilolitre of water costs Rs 5 to produce, it would require Rs 94.5 lakh per day or Rs 340 crore a year.

Apart from the cost, Delhi has a perennial problem of scarcity of water. Recall even the then Congress-ruled Haryana and Delhi fought bitterly over it. Optimum is coming from the Ganga at Haridwar. Free water across the globe, it was found, leads to high wastage.

Add to this, the new Government’s ambitious plan of having Delhi’s own 6200 mw power plant. Calculating at Rs 5 crore a mw, this would cost Rs 31,000 crore. Plus there is a running cost of at least Rs 200 crore a month to pay its staff and other administrative expenses. Since prices would be subsidised, 50 per cent of all expenses on generation and other costs would have to be borne by the State. Further, where would the plant be set up? Who will give the required land?

Besides, land is crucial also for giving people houses at their shanty sites. It involves a number of agencies. The Delhi Government doesn’t own an inch of land. How would it do it then? It will have to fight with the Union Urban Development Ministry to fulfil its promises. Regularising unauthorised colonies, which allegedly mushroomed under the patronage of politicians over decades, will be another daunting task for AAP.

A wi-fi Delhi would require Rs 150 crore for installation, according to AAP’s own  estimates. It would be provided by some private company funded by the Government. However, in reality, wi-fi is free for 30 minutes only. Beyond that it would be chargeable. In addition, the  15 lakh CCTV cameras are to be linked to wi-fi. Each camera would cost Rs 2000, says AAP. This means that another Rs 300 crore is required for installation. Now this would require 50,000 people. Assuming a basic Rs 10,000 a month salary for each, the total annual cost comes to Rs 600 crore.

However, there is a missing link. The cost of massive data servers and a huge control room to monitor all the surveillance is not part of the estimate. Monitoring and other administrative cost would add to a minimum of Rs 12000 crore a year.

There are also costs for additional street lights, proposed marshals to protect women in buses, over 50,000 toilets in public spaces and 1.5 lakh toilets in slums. Modestly, it would be a burden of at least Rs 20,000 crore. Recurring costs are not estimated. And, if Delhi police is transferred to the Delhi government, as demanded by AAP, an additional Rs 4630 crore expenses would have to be borne. As of now, this cost is borne by the Central government.

Promises are easy to make. Fulfilling it requires hard cash, which Delhi hardly has. Populism is fine but nobody has answers how these promises are to financed. One only hopes it does not become a ding-dong political battle with the Centre.---INFA

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