governance, political economy, institutional development and economic regulation

Posts tagged ‘Delhi State’

Delhi voters slap AAP on the face

modi kejriwal

The Lion of Delhi, Arvind Kejriwal, has been bearded in his den. The BJP’s massive victory in all three municipalities in Delhi — North, South and East — has left everyone flummoxed. However, it wasn’t all one way. The AAP held onto their seats as per the outcomes of the 2014 Lok Sabha polls in the South MCD. But it lost seat share in both the North and East MCD to the Congress. In both areas, it seems there was a “ghar-wapsi” (homecoming) of traditional Congress supporters, who had fallen prey to the AAP’s promise of transformation in the 2015 Assembly election.

Delhi State merely a jagir of the Union Government

anil baijal

Anil Baijal, Lieutenant Governor – the invisible satrap of Delhi

The forceful return of the BJP can only be attributed to the TINA (there is no alternative) factor. The confrontational politics of the AAP, which burnt its boats and utterly failed to establish a harmonious working relationship with the Centre, proved costly. Delhi is a Union territory, but with a twist — like Puducherry. Both have a Legislative Assembly that elects a chief minister. But it’s biggest asset — land — is directly controlled by the Union government, as is the police force and the civil service. The lieutenant-governor is the de facto ruler of Delhi state, and he plays to the tune of the Centre, which appoints him. Not all the hugs and shared parathas between the former L-G Najeeb Jung and Arvind Kejriwal could bridge this basic gap in political alignment. The new L-G, Anil Baijal, also follows the same route, an inevitable outcome of the fractured institutional arrangements in Delhi. Only if the same party rules the Centre, state and municipalities can this alignment be matched. This is not possible till 2020, when the next Delhi Assembly elections will be held.

Kejriwal can save AAP in Delhi by stepping down as CM

manish sisodia

Can things change even before 2020, if Arvind Kejriwal resigns, admitting he has lost the mandate to rule? This might be a canny move, and put him on the high moral ground. Ajay Maken, the face of the Congress in Delhi, has already resigned, even though his party made some gains in contrast to the 2014 Lok Sabha and 2015 Assembly results. The AAP has ambitions in Gujarat. The outcome of the recent Punjab polls should have taught Mr Kejriwal a lesson — that being an itinerant leader is only possible if one’s family is part of the political elite and has spent almost a lifetime in politics. A good showing in Gujarat would be a good base for enlarging the AAP footprint into the metros in Karnataka and Maharashtra. Left to himself, Manish Sisodia is a diligent leader with balance and the tenacity to show results, on the ground, in Delhi. More roads and flyovers built at less than the budgeted cost; more mohalla clinics and better services in the slums of Delhi is a painstaking job for an executive, not a charismatic dreamer.

Modi is the king of referenda politics

The Delhi municipal elections reinforce that charisma and shock and awe tactics work wonders. Like everywhere else, since 2014, these elections were fought in the name of Narendra Modi versus Arvind Kejriwal. In a costly tactical error, the AAP sought this face-off as a referendum. Clearly, Arvind Kejriwal has much distance to travel before he can be measured in the same metric as Prime Minister Modi.

Amit Shah is a one-man school for electoral management

The Modi-Amit Shah duo’s trademark electoral tactics of “placing” the right man to lead the Delhi BJP has paid off yet again. Manoj Tiwari, a Bihari actor, has a natural entry point into the significant voter pockets of recently-domiciled Puravanchalis — slang for immigrants from UP and Bihar. An outsider to the more traditional set of Delhi BJP powerbrokers, Mr Tiwari was also the least likely to invite backstabbing, unlike the hapless BJP late-entrant candidate Kiran Bedi, who lost the 2015 Delhi state elections. In any case, Mr Shah’s style of watertight oversight, now honed over half a dozen polls, precludes any dissent within the BJP now.

“dhili” Congress unravelled in Delhi

Compare this targeted “placement strategy” of the BJP with the Congress, which failed to rally its troops behind Delhi leader Ajay Maken. Arvinder Lovely, a Sikh leader, deserted the party for better pickings with the BJP. Manoj Tiwari’s counterpart in the Congress is Sheila Dikshit and her son Sandeep Dikshit. They have familial links to the Purabaia community via the late Uma Shanker Dikshit, Ms Dikshit’s father-in-law, who was a venerated UP politician of the independence movement era. Ms  Dikshit, Delhi’s chief minister for 15 years, from 1998 to 2013, was sidelined, possibly due to infighting between her and Mr Maken.

AAP – resource thin and exhausted post Punjab disappointment

AAP workers

If disjointed leadership cost the Congress dearly, the AAP suffered from electoral exhaustion; a dwindling bench strength and failing credibility. Arvind Kejriwal held out the ultimate bait — a promise to abolish property tax — to win over the middle class. This was the final nail in the coffin of responsible politics. Property tax is the primary source of revenue for all municipalities. Its abolition would spell financial ruin and even worse services than at present. In comparison, the BJP brings to the table the coffers of the Union government. The NDMC area, which is managed directly by the Central government, is a lush, green oasis for the gilded elite — the Lutyens people — in sharp contrast to the dusty, filthy Delhi, the rest of the national capital’s residents live in. The prospect of resembling the NDMC  area was a mouth-watering possibility that few voters would pass up.

Can Modi reproduce the well being of the NDMC area in the rest of Delhi by 2019?


Delhi has voted for the Modi magic to rub-off on them. The denizens of other metros may contest this, but Delhi best illustrates the diligent, aspirational and yet conflicted India — riven by caste, religious, regional and class cleavages. It is a ready crucible for implementing the PM’s vision of a prosperous, equal opportunity-oriented, highly skilled, healthy and sustainable India. Mr Modi is unlikely to disappoint.

Adapted fro the authors article in The Asian Age April 27, 2017


A new “living wage” f0r Delhi

Populism, buttressed by dodgy economics, has become the fashion statement in politics. Last year, the Union government approved handsome “real” increases in government salary. There was little justification for doing so since the government salaries were already fully indexed to inflation and the largesse couldn’t have been justified as a reward for higher productivity.

The default justification was that more money in the hands of government employees would kick start a virtuous circle. Higher demand for goods and services would lead to expanded supply, more jobs and just possibly, more income for the rest of us.

AAP disrupts the cozy status quo in Delhi

This week, the Aam Aadmi Party government in Delhi, used similar tactics to grab eyeballs on Independence Day. Evoking the high moral stance of re-distribution of wealth and the economic principle of boosting demand as justification, the government declared massive increase in the minimum wage. In effect, it imposed a “living wage”, for workers in Delhi.

The impossible dream of “mandating” the end of poverty

Child searches for valuables in a garbage dump in New Delhi

The concept of a “living wage” — pegged significantly higher than the minimum wage — with an eye to decrease poverty has been used in over 100 urban jurisdictions in the United States since the late 1990s. It has also been used to set the national poverty level in India. But it is pegged at very low levels.

In Delhi, chief minister Arvind Kejriwal has proposed that the minimum wages of unskilled labour will be increased from Rs 9,500 to Rs 14,000, semi-skilled Rs 10,600 to Rs 15,500 and for skilled Rs 11,600 to Rs 17,000.

The hike seems unreasonable given that the minimum wage in Delhi is already 35 per cent higher than in neighbouring Uttar Pradesh and 72 per cent higher than in adjoining Haryana.

Delhi is rich but…

It is true that Delhi is relatively rich. Its per capita income of around Rs 18,300 per month is the highest among the states of India and the top 10 metros. Consequently, there is a case for setting the “living wage” in Delhi reasonably higher than in the neighbouring states, purely on the grounds of equity.

The real issue is whether a 47 per cent increase is warranted and how comprehensively should the “living wage” be applied? If it is applied just to the establishments governed by the Factories Act, then it is little more than populism. There are only around 8,000 such factories in land-hungry Delhi and employment in them is static.

If the intention is to enlarge the coverage of the “living/minimum wage” to all registered shops and establishments, which employ around 20 per cent (one million) of Delhi’s five million workers, then the economic consequences can be more substantial.

Mandated wages hurt business and make it shift out 

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Photo credit:

The negative impact will be felt in price-sensitive, low value-addition segments like clothing, food and household goods, where higher wages will hurt business profits. More importantly, will a similar “living wage” follow for the one million workers in the informal sector — household help in rich and middle class homes and in unlicensed small establishments? If so Delhi’s privileged elite and wannabes may have to look for a lifestyle change – let the ayah go and manage their own babies; cook for themselves or use an app to order in; make their own beds; wash and iron their own laundry and learn to use a vacuum cleaner. And what of the ubiquitous car drivers and guards who lounge around the front gate of Delhi homes? Will the well-off opt for Ola and Uber instead?

Poor enforcement can make mandated wage a sham

Mandated high minimum wages, far above the market rate, encounter three problems. First, enforcing payment of the mandated wages depends crucially on clean, clever and consistent regulation. In its absence, it encourages the petty but crippling, corruption of “inspector raj”. Enlarging the scope of inspector raj in Delhi, even as it is being diluted in Rajasthan and Telangana sends the wrong message to investment for increasing jobs and private sector growth in Delhi.

High wages result in loss of unskilled jobs

Second, studies from the US show that the benefits are not uniform across the entire spectrum of workers. On average, unskilled workers lose the most from a high minimum wage because employment declines even as a smaller number of workers, who remain employed, benefit from high wages. Mandated wages rarely benefit skilled workers. Governments tend to be conservative in fixing the differential for skills. Delhi provides only a premium of 21 per cent, or `80 per day between unskilled and skilled work. The market premium is already between 75 to 100 per cent. A mason gets twice the amount as his unskilled worker — often a woman, who does the manual work.

In-migration increases fiscal pressure to provide public services

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High, mandated wages attract in-migrants to cities. photo credit:

Third, pegging a price for labour far above the market rate increases the fiscal burden. This happens directly when government salaries are needlessly enhanced. But it also hits the government budget indirectly, when applied to the private sector. Higher the mandated wage for unskilled work the more attractive it becomes for migrants. With open borders, no control on migration and the Delhi government committed, rightly so, to provide a basic quality of life for all — free water, free medical care, free education, cheap electricity, improved toilets and paved roads — the resulting fiscal impact can be crippling.

Immigrants reduce the market price of unskilled labour

One way of ensuring that market wage rates remain aligned with mandated wages and are not beggared by competition from in-migration, is to licence city workers, as in China. But it is difficult to do this effectively in a governance environment of pervasive corruption. Licensing is a one way street to inefficiency and corruption. If government land cannot be protected from encroachment by the mafia, there is little hope of implementing an equitable worker licensing regime. Railway stations are a good example. Try getting a licensed coolie to carry your bags at the stipulated rates and you are more likely to miss your train.

Test the viability first in government contracts

The high salary of unskilled government workers already provides a wage floor. But the incremental numbers employed are limited. The trend, since 1990s when the government adopted the practices of “new pubic management”, has been to outsource non-core services i.e. cleaning, canteen, security and office support. Worker productivity clearly increases under private management. But there is insufficient evidence that the wages paid to them reflect this higher productivity. The apprehension is that the workers will suffer from price competition to get government contracts.

This is a perverse and unintended outcome. Tightly regulating the private contracts that are funded by the government can ensure that the mandated wages are passed through to workers. And contractors do not corner the wage increase. This is how the financial viability of the enhanced wage rates should be tested before imposing them.

But there is little point in cultivating a small, handsomely paid labour “aristocracy”, as the CPI(M) did, whilst throttling investment and employment.


Adapted from the author’s article in Asian Age August 19, 2016

Modi and Kejriwal: A New Year’s tale of two faces


Modi is the face of efficient, impersonal, big government on the pattern of China. Infrastructure development, economic growth and jobs are what this State assures. In exchange, citizens are to accept greatly constrained rights with respect to personal freedom or the public voicing of alternative sentiments. Discipline and allegiance to the party line is the leitmotif of this model.


A massive, meritocratic bureaucracy led by a charismatic and decisive leader, delivers public services to the people. It is not however a “mai-baap” colonial style government but one chosen through periodic elections. In between elections, citizens are expected to get on with their core business of living and let the constitutional apparatus (government, parliament and the judiciary) manage governance. This is quintessential top down, Weberian, technocratic governance.


The Indian model of this version of governance comes with routine misuse of government facilities for personal purposes; party expenditure on elections clearly far in excess of the limit imposed by the Election Commission; slick and opulent pandals for mammoth public meetings; the self-assured aura of a “leader” surrounded by self- important security men with guns. The fly-in fly-out schedules. The BJP is as complicit, as any other traditional party, in maintaining and growing this imperial image of big government.


At the other end of the spectrum are Kejriwal and the fledgling Aam Admi Party (AAP). He is the face of social activism and citizen centric governance. His vision of the State is as a facilitator for implementing the will of the people, ascertained not solely through elections but, to the extent possible, directly from the people between elections. Necessarily, his is a decentralized form of governance with local committees empowered to decide their affairs. The government is dis-empowered and compelled to ask the people, before taking any major decision.


The key ingredient of the Kejriwal magic is his frontal assault on corruption and the rejection of “perks” which are available to leaders today; official cars, liberal maintenance grants, opulent official homes, junkets abroad, free electricity and water etc. His personal rejection of such privileges; the symbolic travel by Metro to his swearing in; his deliberate choice of clothes, closely resembling the neighborhood vegetable vendor, all send reassuring signals to his electorate, that he is one of them.


Modi is in fact of commoner stock than Kejriwal. But long formative years spent in the network of the quasi-militarist RSS, have made him into a remote, albeit responsive figure, renowned for big public projects (Sabarmati revival, Sardar Patel Statue, 100% electrification) but in dress, speech pattern and appearance (witness his grand new office in Gandhi Nagar), very much a man who has fought his way through on merit and conquered his circumstances. A man to admire, but difficult to like.


In comparison Kejriwal exudes commonness. His speech is consciously simple and direct. His manner is warm and open, even appealing. His winning smile and shy, shrugging-off of praise and accolades, his contempt for the “Khas” (special) people dressed in a suit and tie and driving a Mercedes, instantly resonates with any one struggling to buy onions. His party consciously projects its humble beginnings, from within the people, as an organic force, a natural phenomenon, which he now ascribes to Godly assistance.  


As in the recent Delhi State elections, the BJP could be the largest single party in the 2014 Lok Sabha elections. Their recent sweep in State elections in Rajasthan and Madhya Pradesh and retention of a tribal State-Chhattisgarh, augurs well. But getting past the half way mark, even with allies, is a target as stiff as a Patiala peg.


Modi will be nearing 70 years of age by the time the next national election comes around in 2019. A rank outsider to the National Leadership of the BJP, he cannot survive till 2019 as the BJP’s Prime Ministerial candidate. 2014 is a make or break year for Modi. What are most likely to break him are the antipathy of the Muslims and the Kejriwal inspired impatience of the urban common man with traditional elitist, more-of-the-same politics.


Modi may find to his dismay, Kejriwal/AAP clones cutting into his traditional, urban, vote bank of business men, professionals and the middle class, at least in the 50 large metros which have a vote share of 15% of the national electorate. Coupled with the near certain loss of the Muslim vote comprising another 15% of the national vote share, Modi will be left battling to get a 40% vote share. He will have to jostle hard with caste based and regional parties and the Congress in UP, Bihar, Haryana and Karnataka. A very tough call indeed.


My New Year’s wish is a BJP plus allies national government, with a wafer thin majority to keep them on their toes and at least 20 Kejriwal/AAP clones as Members of Parliament out of the 542 seats in the Lok Sabha. This would put the AAP plus clones in the same league as the existing strength of Mulayam’s Samajwadi Party (22); Bhenji’s Bhujan Samaj Party (21), Didi’s Trinamool Congress (19), Nitish Kumar’s Janta Dal (United) (19), Karunanidhi’s DMK (19), the CPM (16), Naveen Patnaik’s BJD (14) and way ahead of the Shiv Sena (11), Amma’s AIDMK (9) and Sharad Pawar’s NCP (9).


India needs a makeover. What better than BJP, a traditional, effective, centralized, growth and jobs oriented party, for near term governance till 2019? Thereafter, scaling up of the Delhi State Government model of decentralized, citizen centric, corruption free government, being rolled out by the AAP from January 4, 2014. I earnestly hope God reads blogs.






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