Big States cannot replicate Delhi model

The credit for the victory of the Aam Aadmi Party (AAP) in the recent Delhi elections is being given to free electricity, water and bus travel for women provided by the State government of Delhi.

Question is whether this model can be replicated by other States — especially larger States like Uttar Pradesh and Bihar?

The per capita income of Delhi in 2018-19 was Rs 365,000 per year against Rs 61k for UP and Rs 49k for Bihar.

The per capita Budget of the State government was Rs 37,000 for Delhi, 26,000 for UP and 19,000 for Bihar. The actual differences are more skewed because the expenditures on Delhi Police are borne by the Union government.

Further, less distances are involved in Delhi hence the required expenditures on roads and similar facilities is less. Thus the comparable figures are likely to be Rs 50,000, Rs 26,000 and Rs 19,000 per capita for Delhi, UP and Bihar respectively.

It is therefore not possible for the poorer States to bear the recurring expenditures on free electricity and water as it has been done by AAP in Delhi.

The electoral benefits of such freebies do not appear to sustain either. The Congress started MNREGA and waived off loans of farmers and won the 2009 elections. MNREGA continues to run. However, it lost the elections in 2014. Indeed, there were other factors but that is always the case.

About 10 States have waived off farmers' loans since 2014 and many have provided free electricity to the farmers — yet the ruling parties have repeatedly lost the elections. This indicates that freebies are like steroids that dissipate soon. That said, the free electricity, water and bus travel could stand on a different footing than loan waivers. A farmer does not "get" anything from the waivers.

He only does not have to bear a negative. This saving of the negative does not hit the farmers' consciousness with the same force as free electricity — which hits him every time he switches on the tube well. Secondly, these freebies reach only a small farmer section of the population. The share of agriculture in our GDP is about 17 percent today.

Although about one-half of the total population lives in the rural areas, large numbers do not make a living from agriculture. A number of occupations such as weaving and pottery are undertaken in the villages but their economics is linked to the city. These artisans do not benefit from the free electricity and loan waivers.

Thirdly, free electricity, water and bus travel directly enter into the consciousness of the family members whereas loan waivers mainly enter into the consciousness of the breadwinner.

The lesson for other States wanting to replicate the Delhi model is to give such freebies that hit the consciousness every day rather than those that hit the consciousness one time.

In so far as the budget problem is concerned, I think the basic model of AAP of providing free water and electricity to the small consumers is in the right direction. A solution for the budget-constrained States would be to cross-subsidise the small consumers — increase the tariffs for the high-end consumers to cover the loss from free provision to the small consumers.

Conclusion is that the Delhi model of freebies is replicable subject to (1) implementation of cross-subsidies; (2) if designed in a way to reach large numbers of people every day rather than a small subset of the farmers; and (3) reach them through services that the people use directly every day rather than through one-time loan waivers that provide once-a-year relief.

The second aspect of the victory of AAP is the improvements in the delivery of health- and educational services. People are actually getting some free medicines even if not ill; and the doctors respond to their needs.

The infrastructure in the schools such as improved classrooms, playgrounds and auditoriums have improved. The principal of one government school said that the teachers had been sent for spiritual and academic training. He said that there was some improvement in the teaching.

The hands down approach of Deputy Chief Minister Sisodia contributed to this improvement. He is reportedly a spiritually oriented person. He is accessible to the complainants, visits the schools and hospitals frequently and is in the personal know of the efficient and inefficient doctors and teachers. He can appoint people in key positions based on his personal knowledge.

This model is similar to the one that was implemented by Narendra Modi in Gujarat. He was accessible to the complainants and knew the officials from across the State personally. Improvement in the implementation of projects such as making of highways was secured by him on the back of such appointments. However, the conditions of government schools and hospitals did not show much improvement.

Thus, the improvement in the provision of health and education services secured in Delhi is not replicable on a large scale because the capacity of a Minister to receive and internalise the inputs from large numbers of hospitals and schools is limited.

As a result, such person-based model of governance could be suitable for health and education in a small State like Delhi or for infrastructure development in a large State like Gujarat but not for health and education in a large State.

We should also not forget that the improvement in governance — trains ran on time, for example — secured during the emergency dissipated in but a week after its removal. Therefore person-based models of good governance are almost impossible to sustain. The Delhi model is not replicable on this count.

The way forward it to develop systemic solutions for good governance. A friend from Kannauj said that it was a routine practice for the government teachers to give a fixed bribe to the village Pradhan and appoint a 12-Class pass youth to teach the primary classes as a surrogate teacher.

The government teacher would draw a salary of Rs 50,000 per month, pay Rs 1,000 to the Pradhan and Rs 5,000 to the surrogate teacher and routinely pocket the rest as a free income. The Minister sitting in Lucknow can hardly keep a vigil on such widespread malpractices.

The need is to develop a system that prevent such malpractices. This could be done by a combination of independent audits, appointment of spies, and anonymous evaluations by the users such as hospital patients and parents of school going children.

.(The writer is formerly Professor of Economics at IIM, Bengaluru)