INDIA: Receiving something free of cost or at subsidy brings a delightful cheer to everyone’s face. But one must always remember that if the resources are finite, which they are, at the end of it there will be a zero-sum game. Nothing in this world can come for free and as one progresses, he or she realises that there is a cost to pay.
Here, I would be discussing the back-to-back wins that the incumbent Aam Aadmi Party generated in Delhi, 2015 and 2020. Their biggest poll promises have been about bringing cost reductions to a huge segment of the population by way of subsidised electricity, free of cost travels in public transportation and many such offerings that brought immediate cheer amongst the common citizens. But today I would like to analyse the almost 6 years of their functioning and what these freebees have cost us overall.
For the starters, let us look at the crumbling infrastructure in the capital. Barring exceptional and VIP areas, even the Outer Ring Road is marred with debilitating roads and infrastructure. The increasingly poor state of roads would mean higher time to commute and lesser fuel efficiency. On an average, if an autorickshaw owner makes 20 trips a day, he or she would make, may be, 18 now. The result is loss of income by at least 100 rupees per day, totalling rupees 3000 a month. Now, how does it connect to the freebees? Sources of revenue are finite for the government and from these sources it has to decide its spending. The government can decide to give subsidies, or it can decide to spend it on something like infrastructure enabling people to earn more. Since the current government has decided to give subsidies, they can’t spend of infrastructure development, resulting in the loss of income for people.
But there is one more catch. As part of natural progression and growth, the government is expected to develop the public utilities services and roads, hence, it needs money. Now that a good quantum of it is spend on subsidies, the other quantum already allocated for specific purposes, it has to find new sources of revenue generation. Here comes the drives to introduce various types of challans. A quick trip down the outer ring road could give you a peek into newer methods applied for road challans for past few years. The speed limit at various sections is close to 30 kilometres per hour, which means firstly one will have to spend more time travelling the same distance, secondly, you end up paying huge fines if you break the speed limits. In the world where agility is the key to success, we are witnessing slow-downs! Not to forget the fines that one ends up paying. On an average two such challans will cost you rupees four thousand. So, for all the freebees gained, which may amount to 1-2 thousand rupees of cost savings, the cost being incurred on an average is almost 6-8 thousand rupees a month for an individual.
As I said, there is nothing like a free lunch in the ecosystem which counterbalances itself due to finiteness of resources. Public welfare should be the utmost priority of a government and it should always aim at elevating the living standards of people in all segments. It would be imperative for a government to focus on the ways and means to provide better earning models to people rather than protecting them from costs. Costs will keep going up as is the nature of supply and demand. The focus needs to be on employment generation and incremental gains for each segment of the society rather than subsidies. Subsidies will only create inefficiencies in the system which are bound to constrain growth.
Population is as much a strength as a weakness too, for India’s growth. We must strive to harness the workforce available with us to create growth stories with incentives to achieve success. With the kind of population we have, subsidies will over burden the system, which is practically being seen in Delhi at this stage. Our strength is numbers, be it from producing or from consuming point of view. This strength needs to be channelised for developmental work, by ways of public works schemes and public private partnership models. If the penchant to win elections by providing freebees continues, its not far that the governance model will succumb to its own doing.
I remember very distinctly the three-time Chief Minister of Delhi Late Mrs. Sheila Dikshit had cautioned about the consequences of the current model of freebees. It is not yet too late for us to realise that for sustainable growth, incremental earning models will be of greater good than cost shielding models that exist today in the Delhi government. There is nothing more harmful for society, in general, than subsidies; they only end up creating economic black holes which are very hard to overcome.
Vishwa Deepak Dikshit, Founder of UnMitigated and MusiCulture, is a Media Entrepreneur and a Logistics professional. He is an alumnus of MDI, Gurugram and has been an active political commentator. He tweets at @vishwadikshit