Free Revolution, as many would call it, was the opening bid of the newest national-level political party, the Aam Aadmi Party (AAP) in the 2015 Delhi Elections, which promised under the leadership of Arvind Kejriwal, many “freebies” for the citizens of Delhi, ranging from Free Electricity, Water, Health to Free Travel and Education.
This Free Revolution by AAP was considered a masterstroke by the political pundits knowing the whereabouts of politics and vote banks of Indian Demography and behavior, but was seen as suspicious and cancerous in long term, by some, if not all, economic pundits for its cascading impact on the economics of India.
Arvind Kejriwal, as the Chief Minister of Delhi, has been on the frontline talking about the benefits of his “Free” schemes, that benefit the citizens of Delhi, by increasing their disposable income, as subsidies and other grants have reduced Delhi citizens’ expenses, saving money.
These subsidies and expenses are seen as a direct burden on the Delhi Governments budget, putting an increase in the revenue expenditure of the government, but at the same time, it is to be noted that, even though the government is spending on “freebies”, its Fiscal Deficit is the lowest in India (but contracting), which means the governments’ revenue receipts are bigger than the expenditure, which seems unusual, but the Delhi government was successful in doing so, which gathers a round of applause from time to time.
Delhi Government under the leadership of Arvind Kejriwal has promoted Free Education through public schools and has worked to a greater extent on improving the conditions of some of the existing schools that were never imagined by anyone, this work helps in improving the level of education in India, and providing a positive impact on Human Development Index (HDI), which is said to more important than any domestic product.
‘Mohalla Clinic’ is another such scheme by this government that can be a proven remedy for healthcare problems, and improve the HDI, by giving ‘Free’ medical checkups, treatment, and medicine.
But, the First Concern about the good-looking picture portrayed by the Arvind Kejriwal’s AAP government has a far deep and darker shade than brushed and shown.
Delhi government has spent a big amount of money on making some of the schools “Luxury Schools”, whereas, many other remains below the expected level, which needs more focus, and more capital expenditure from the government.
The government has been keen on the beautification of Delhi, which is a good thing, but Delhi needs infrastructure, and excessive Capital Expenditure from the government, that would ultimately create more jobs in the National Capital, and might even fulfill the same governments’ old promise of creating new jobs, which was found to a failure.
The Second Concern about the “Free Revolution” is a disruption in the inflation-employment cycle.
The government, by giving subsidies and freebies to the citizen is keeping an increase in the disposable income of the people, which will ultimately create demand and hence the Inflation. There is no certainty of this type of Inflation, and can be termed ‘Volatile Inflation’, as it increases with a sudden call of subsidies and freebies, and might create a panic, if or when called out.
An increase in the disposable income of the people creates a risk of change in “Bank Habit” which can ultimately result in “Money Multiplier” losing the value of the rupee, as it forces the RBI to introduce new notes in the market, at an extent unknown, can be small or big, depending on the number of people using it, which is quite uncertain in Delhi government’s plan because the subsidies are “Not Targetted” but given to all in certain benchmarks.
The Bank Habit and Money Multiplier become a threat “Only If” the people are encouraged to withdraw money from the bank, resulting in a reduced holding by the bank.
The Fiscal Deficit and Revenue Deficit of the Delhi Government has been on the slide of contraction since Arvind Kejriwal came into power with a huge number of seats in the assembly, and an avoidance to check these long-term threats to the economy and continuing the “Freebies” to people, might get votes but can be fatal to future generations.
The target of the Delhi government should be to create more assets with more capital expenditure on new infrastructure and facilities. The subsidies and freebies should be targetted, and should not be available to all, as many times it first goes to the one who might not need it, and “One food given, is someone’s food taken.”
BJP, Congress, and other political parties in Delhi have been vocal about the nature of the “Free Revolution” in Delhi and the threats to the future, and its fearful wide-scale implementation in the whole nation by different political parties in hope of seeking votes, as seen during the Punjab election, where several parties contested on giving “Free Stuffs” and Aam Aadmi Party won the election as it was able to provide more Free stuff than others.
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