Pop Goes The Weasel
As Delhi/ NCR braces for a near month long electoral
campaign of the Congress, the AAP and the BJP, the three principal contenders
aspiring for the next Government of
Delhi, hopefully on a majority basis, promises are flying thick and fast.
Prime Minister Narendra Modi has kicked off the BJP’s electoral campaign on the 10th of
January and has promised pucca
housing for all slum dwellers, 24x7 electricity for everybody and portability
of the electricity service provider at will, just as in mobile telephony. The
BJP has been careful not to make wild election promises, relying instead on
what it feels sure it can deliver. Of course, almost all the illegal and
unauthorised colonies have already been promised regularisation even before
election fever began.
Congress is yet to start its campaign, apart from saying it
may agree to support the AAP again if necessary. And AAP, led by the voluble
Arvind Kejriwal, the only known CM candidate from any of the competitors in the
fray so far, has reiterated a demand for full-statehood. AAP is also promising all manner of sops and
subsidies if it is voted into power. But how exactly does it plan to pay for its promised largesse?
When one looks at Delhi’s finances, the usual pattern of
profligate spending without a care towards balancing the budget is curiously absent. The three-term, 15
year-long Congress Government under former Chief Minister Shiela Dikshit did a
pretty responsible job of fiscal
management, despite the CWG and other corruption scams that erupted from time
to time. Still, it handed over an essentially robust economy to the 49 day AAP
Government, which promptly drew down on most of its reserves.
What’s in the Budget for 2015 for quasi-state Delhi which saves on expenditure because it does not have to pay for its law and order apparatus, its traffic policemen, or its land administration? And it also receives grants from the Centre, plus its own capital receipts and non-tax revenue. All this put together enhances its income by another 7% or so.
The revenue figure,
for 2015, all inclusive, is estimated at
Rs. 36,766 crores, but both the plan and non-plan expenditure have not made any provision for additional
subsidies, which already consume about a quarter of the spending.
When President’s Rule was imposed in Delhi on 16th February 2014, the six-month
‘on-account’ budget passed by the UPA did not carry forward the additional subsidies either.
But, with AAP promising
50% subsidy on electricity, presumably for all the poorer voters, the
fiscal health of the capital will be hit hard, provided AAP pulls off a
surprise win, and proceeds to live up to its commitments.
The general state of finances of the NCT is however very healthy presently,
comparatively speaking. Its per capita income is three times the national
average, based principally on Delhi’s trading and services activities. The
total cumulative state debt stands at about
Rs. 30,000 crores, and even this modest sum has been brought down over each of
the last three years.
The NCR of Delhi consequently has a very low annual deficit
financing figure, and a percentage of under 1% of revenue.
Tax revenues however are on an uptrend, and grew 9% in 2012-13
to Rs. 26,150 crores. This went up further to Rs. 30,454 crores in 2013-14, up
16%; and is estimated to be marginally higher still at Rs. 36,766 crores in
2014-15, after a year of President’s Rule. This then, is the status on the eve
of the fresh elections announced for February 7th, 2015.
The Opinion Polls are indicating a BJP win and majority
Government in the 70 MLA Assembly. But if perchance the AAP pulls of an
unexpected coup, the finances of the state are likely to be turned on its ear.
Kejriwal is constantly making extravagant promises: he says he will subsidise electricity and
water afresh, alongside a host of other populist measures.
This will shoot up the debt figures and leave no revenue
money whatsoever to invest in the city’s over-burdened infrastructure. Up to
now, about 13% of the revenue was being set aside for infrastructure
development, which is not too bad, when viewed from the perspective that it is
self-financed from accrued revenue, and not borrowed money, just fuelling deficits.
The 2015 budget provides for a number of forward looking
measures, such as: enhancing healthcare via strengthening facilities at
existing hospitals, and building both a new medical college and another
multi-speciality hospital. There are plans to start 20 new schools, provide
toilet facilities for all slums, build 58,000 new unit housing for the
economically weaker section ( EWS), enhance water supply, clean the Yamuna,
procure 1,380 new low floor buses and 400 more cluster buses, build two brand new inter-state bus terminals,
construct several more flyovers, and
proceed with stage 2 of the elevated
corridor over the Barapullah Nullah. There will also be better, more reliable, electricity
transmission and distribution built up.
Implementation though,
under the Lieutenant Governor, has been mostly lagging. This will be the BJP’s
main advantage, because Modi has the
creds as a doer, both in the Centre and in the States.
(854 words)
January 12th,
2015
Gautam Mukherjee
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