AAP and their ‘freebies’: How ‘free’ electricity lollipop by governments puts a high cost on the public
BY PALLAV
With the political atmosphere highly charged up ahead of the upcoming assembly elections in states, political parties are making a number of promises to secure a win at any cost. Accordingly, Delhi Chief Minister Arvind Kejriwal too has been making a ton of promises to lure voters towards his party.
Recently, Kejriwal promised 300 units of free power to every home in Punjab if his party wins in 2022. As per Kejriwal, the AAP government in Delhi is providing 200 units of free electricity to each family, while the concession in Punjab would be 300 units. Kejriwal also promised ‘free money‘ to all Punjabi women, regardless of their financial situation or needs.
The Aam Aadmi Party’s proposals for freebies have accelerated since they were elected to the Delhi government, with the party declaring free power and free bus travel for women. Incentives centred on elections are never a sensible move. These policies demonstrate a lack of long-term vision. Interestingly, because regular schemes have failed to deliver, AAP will have to rely on such freebies to secure public loyalty and obedience before the election. They would not have had to resort to it if they had provided legitimate services to the people.
While AAP is campaigning on excellent governance and stressing to uphold its promise of free power, we’ll look at some of their policies and how they are detrimental to the country’s progress. Along with the normative implications of these schemes, we’ll also consider the statistical ramifications.
Power Distribution Companies facing serious issues
Power Discoms in India are suffering badly. Their problems are mostly caused by two factors: first, their failure to minimize transmission and distribution (T&D) losses, and second, price increases to keep up with rising expenditures. Both have the potential to affect households across the country, and because state governments have authority, raising tariffs is a political nightmare. As their total standalone revenue shortfall in 2019-20 was around 3000 crore, power discoms in Delhi requested to regulator DERC that a cost-reflective, gradual rate rationalization be implemented.
Arvind Kejriwal has defended these free schemes by arguing that as a state citizen, one is entitled to free services from the government, which one must get. He deceives people on how the full weight of these schemes is clandestinely shifted to the general public, and that the gain provided by these schemes is only ephemeral. Instead, why not provide them job opportunities, self-help groups, and better public institutions to help them become self-sufficient, which is a long-term solution to all problems? What could be better than the opportunity to grow wealth and enhance work prospects instead of ‘freebies’?
Funding of subsidies
Subsidies are important because they are targeted towards specific goals. They must be tapered away after these goals have been met. Waiving the total consumption cost of electricity does not qualify as a subsidy because electricity is a core utility. It’s merely a political ploy to increase the number of votes in the elections and stay in power. People are readily swayed by such policies and fail to recognize that the true cost is borne by them in another way. In the case of Delhi, it is worth noting that power subsidies impose a significant financial strain on the public exchequer.
The Deputy CM of Delhi proposed Rs 3,227 crore for the energy sector in Budget Estimates 2021-22, of which Rs 3,090 crore is only for power subsidies, accounting for 96 per cent of the total allocation for the sector and 4.4 per cent of the whole budget. This is a tremendous chunk of money. If consumers paid for the power they use, the entire sum might have been used for a more sensible cause.
Implications of such schemes in a border state like Punjab
The constraints and growth opportunities in the border areas take on specific importance in the planning and development process. The international boundary between Punjab and Pakistan is approximately 553 kilometres. Long being plagued by the drug mafia, Punjab necessitates a lot of effort to maintain security. Punjab’s entire budget is more than 6 lakh crores, which is around 9 times that of Delhi. Calculating the cost of power subsidies in Punjab, we can estimate that it will cost roughly 27000 crores (nine times the expenditure on power subsidies in Delhi).
The Punjab government already has a history of overcommitting to subsidies while underpaying the discoms. This has a significant impact on the already precarious financial status of Punjab State Power Corporation Limited. It’s important mentioning that since assuming power in 2017, the Congress government has failed to pay subsidy dues every year. It has already accumulated a Rs 10,000 crore electrical bill, which is to be paid to PSPCL, as per a report in the Times of India. With the announcement of further enticements by chief minister Charanjit Singh Channi, the subsidy bill for the current fiscal year has grown to Rs 20,016 crore, of which the government has paid just Rs 7,800 crore so far.
So, If AAP implements such a policy, it may cause enormous problems in the state because, if the incumbent government is already unable to pay for previous commitments, how will the incoming government pay a bill that is 1.5 times the existing outstanding? As a result, something on the other side will have to be sacrificed, whether it’s the security budget, transportation, or rural development spending. And they’re all really important sectors.
How these free schemes affect environment
Punjab is an agricultural state that is already dealing with water shortages. From 1998 to 2018, a Punjab Agricultural University (PAU) research indicated that the groundwater level in 18 of the 22 districts fell by nearly a meter every year. The state has failed to diversify its crops and continues to rely on water-intensive crops. These crops need a tremendous amount of water, and hence power. Free electricity would not only squander energy, but it would also degrade the status of groundwater level.
Despite the fact that Delhi is not an agricultural state, its groundwater level is steadily dropping. According to a study, Ground displacement threatens a 100-square-kilometre area in the national capital region. The alarming rate of groundwater depletion in the capital might lead to portions of the city’s surface collapsing. Due to the mismanagement of Delhi’s water supply, a significant amount of unfulfilled demands is met via groundwater extraction using submersible motors, which is more convenient to use than paying for a water truck because there is no energy expense involved.
AAP has failed to deliver in Delhi
In Delhi, Arvind Kejriwal failed to deliver on his promises. The city of Delhi is in a miserable state. Even while he boasts about his initiatives, none of them has resulted in an improvement of the situation. The MCDs are still suffering as a result of the lack of finances from the Delhi government. The school system, which the AAP claims to be the best in the country, is misleading. More than half of the promises made by the AAP during the election campaigns are not kept. For example, Kejriwal vowed to deploy more than 1000 electric buses by 2019, but just one vehicle has been put into operation so far and that too this year!
The AAP’s promises to make Delhi London and the Yamuna the world’s cleanest river are the finest instances of demagoguery. Thanks to Arvind Kejriwal, Delhi has been the world’s most polluted capital city for the past three years. Kejriwal has shown to be a master at deflecting attention away from significant concerns like women’s empowerment and pollution and onto topics such as the installation of thousands of cameras on roadways that even lack street lights.
Freebies are the problem, not the solution
Free schemes for the whole population are never considered to be feasible policies. Those who stand to gain from “free” government money have a strong motive to gather and advocate for a piece of the pie. Conferring favours on specific groups in exchange for votes and campaign funds comes at little or no cost to legislators, but it comes at a cost to the public exchequer, which bears the brunt of all politically motivated decisions.
In connection to political parties tempting voters with promises of freebies ahead of this year’s assembly elections in five states, the Supreme Court has sent a notice to the Election Commission of India (ECI) and the Centre. The Supreme Court stated that it had previously recommended that the Election Commission formulate guidelines to avoid such conduct, the polling body had only had one meeting with political parties to solicit their opinion.
If the AAP truly wants to work for the public welfare, they should concentrate on altering their dishonest mindset and committing themselves to meet the true needs of the general population, not ‘freebies.’
