Delhi: AAPs competition good, politics unhealthy

It is indeed noteworthy that the Aam Aadmi Party (AAP) was able to compete politically with established parties such as the BJP and Congress and emerged as the largest party in the Chandigarh citizen polls, their first credible electoral victory beyond Delhi. But its questionable policy of free electricity, water and transportation costs even for the non-poor is a willful misallocation of resources even when basic services and infrastructure are not funded.

The political culture of routinely making little money collecting reasonable user fees would be uniquely catastrophic to the economy and community in several ways. It seems that AAP has successfully used Delhi’s relatively financially strong budget to give out freebies in the areas of public transportation, water and electricity, among other things, but the fact is that Delhi’s capital spending has now plummeted. The rampant giveaways just aren’t sustainable even in the relatively high-income National Capital Territory. Note that almost 40% of the total length of the road in Delhi has no sidewalks, not to mention that Delhi’s streets are terribly unsafe for pedestrians and motorists alike. The demand for buses is great. Electricity tariffs have been deliberately left untouched for years in order to ingratiate themselves with the electorate, but they must certainly have included vital investments in distribution and supply.

Delhi’s power distribution companies have more and more regulatory assets on their books. The rulers must not merrily step onto the path of non-reform. The political executive must oversee a competitive power market with transparent subsidies. Our tax rate is far too modest to deliberately not charge usage fees.

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