Terms of Trade | Delhi’s reckoning with democracy
AAP's core political economy model is to divert state resources from investment to supporting the short-term consumption of the poor.
Delhi, the city-state (technically union territory), will go to the polls on February 5. The Incumbent Aam Admi Party (AAP) will be looking to secure power for the third time in a row in these elections. Its primary challenger, the BJP, will be hoping to end the hiatus between its performance in national and state elections. In the last two Lok Sabha and assembly elections held in Delhi, the BJP and AAP have secured overwhelming victories over each other in the former and the latter.
The only logical explanation of this political promiscuity of a large share of Delhi’s voters, as has been argued by Neelanjan Sircar in these pages, is that they prefer (welfare) delivery over (Hindu) identity when it comes to choosing a state government. The question in these elections is whether this pattern will continue to hold. Given the fact that the BJP has shifted its stance from criticising to embracing freebies in many recent state elections, the question remains whether the BJP will make similar promises in Delhi and it would lead to voters ditching the AAP to choose BJP’s welfare measures along with its ideological appeal. There is no point speculating about it and we will know the answer on February 8 when the votes are counted. However, even if this were to happen it would only underline rather than negate AAP’s core politics.
This column, however, wants to make a larger point. That India is a vastly unequal country which has hundreds of millions of people living in extreme precarity, if not statistically defined poverty, is well known. We had to give free food grain to 800 million people during the pandemic to make sure that, there is no other way to put it, they survived. But all of us like to believe that this proverbial wretched of the earth population lives in villages and our poorer states. Delhi, India’s national capital and one of its biggest cities, is expected to be different. Its per capita GSDP in current prices was ₹5.13 lakh in 2023-24, more than double the all-India number which was ₹2.11 lakh. For states like Bihar and Uttar Pradesh the numbers are significantly lower, ₹66,828 and ₹1.07 lakh, respectively.
However, the AAP’s Delhi campaign suggests that Delhi’s relative well-being is more statistical than real. Like many parties in other states, the AAP has made cash transfer to women a critical part of its campaign this time. It is promising ₹2100 per month to the poor women. AAP’s social media advertising of the scheme gives us an idea of what they expect this additional money to do for their voters. Women are expected to be able to buy a litre of milk instead of half a litre or afford a bottle of shampoo. Of course, they are expected to be grateful to APP and its leader Arvind Kejriwal for this cash.
We can agree or disagree with the AAP on a lot of things, but one has to accept that they do have a very good idea about what Delhi’s poorest voters want. It is this constituency which has given them a core voter base and electoral victories again and again. Moral or libertarian disapproval of such schemes aside, one must agree that they are deeply democratic in a way. The AAP gave agency to the poor in the city-state’s politics. In return, the poor have given it (at least so far) their wholehearted support.
However, there is another way to look at this issue. A simple disaggregation of the Delhi government’s spending by capital and revenue expenditure shows that the latter’s share is less than 20% now. A long-term trend shows that AAP’s control of Delhi has led to a fall in the share of capital spending in Delhi. There was a time (during Congress Chief Minister Sheila Dixit’s first term) when Delhi used to spend 50% of its money on capital spending.
This is not some bitter nostalgia. It is the investment in those times that is still sustaining the metropolis which is home to 15 million voters and more than 20 million people. A lot of this infrastructure is now inadequate, overstretched, obsolete and crumbling. Those who live in Delhi can see this everywhere. Delhi’s drains get flooded with very little rain, the city’s traffic is getting worse by the day, there is next to no infrastructure to deal with what is now a decade-long problem of severe air pollution, and large parts of the city are now heat islands, which reach unlivable temperatures during summer.
One can go on counting the problems. But most of these problems matter more to the well-off in the city. If AAP’s advertisements are any indication, the poor, who live in slums or their equivalents, cannot even afford half a litre of milk or a bottle of shampoo. They have bigger things to worry about than the lack of public infrastructure and associated negative externalities in the city. They would rather vote for a party which supported their private consumption than the provision of public goods which has largely made the lives of the well-off easier.
Why did Delhi’s politics only wake up to this fact relatively recently? One can argue that migration to India’s large cities has increased significantly in the post-reform period. And with this, the number of poor voters has also increased. This migration has helped bring down crushing poverty in India’s villages and poor states. But it has perhaps brought crushing poverty to India’s metropolitan towns. It is this migrant workforce which provides contact-intensive services at dirt-cheap rates to the well-off in cities like Delhi.
Unlike many countries, including China, our political class has had the sense of self-preservation to do absolutely nothing to prevent this migration lest an economically stagnant periphery lead to a political explosion in the country. What we have as a result of a growing influx of poor voters to large cities is what can only be described as a zero-sum game of political economy. India’s largest cities have made it politically rewarding for politicians to sacrifice much-needed infrastructure investment in such cities for welfare benefits to win elections. The poor survive but the cities must suffer.
To be fair to AAP, it only exploited this zero-sum game, which was created by India's extremely skewed growth trajectory in the three and a half decades of economic reforms.
To be sure, private capital should not be complaining. Delhi’s failure to provide public goods to its population has led to a booming market for a variety of private goods – air purifiers and water purifiers to air conditioners and large cars – to allow the rich to insulate themselves in an increasingly unlivable city. Economists should perhaps come up with a new category for this kind of demand: conspicuous consumption in distress. As far as the political economy is concerned, AAP’s politics of hand-outs at the cost of key urban infra is Delhi’s reckoning with democracy.
Roshan Kishore, HT's Data and Political Economy Editor, writes a weekly column on the state of the country's economy and its political fall out, and vice-versa
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