How do political parties take over elections?
The just held elections for Delhi assembly on Feb. 08, 2020, though being a democratic exercise, may prove to be a popular gimmickry where the party in power, the Aam Aadmi Party (AAP) promised to dole out unparalleled freebies and lollipops to win over popular votes. Following the suit, the main contenders of power the Bharatiya Janata Party (BJP) and Congress- also copied the same tactics in their respective efforts to influence the voters of Delhi.
BY DEVANSHI JAIN | 5 min Read
The just held elections for Delhi assembly on Feb. 08, 2020, though being a democratic exercise, may prove to be a popular gimmickry where the party in power, the Aam Aadmi Party (AAP) promised to dole out unparalleled freebies and lollipops to win over popular votes. Following the suit, the main contenders of power the Bharatiya Janata Party (BJP) and Congress- also copied the same tactics in their respective efforts to influence the voters of Delhi.
New Delhi, which has a much higher level of urbanisation and industrialisation, the freebies include high-end consumer durables such as :
These facts are well known and widely publicised. However, what is not so publicised is the consequence of shelling out such generous dole programmes.
Ranen Banerjee, leader, PwC India, said. “The increase in the debt stock at the State level is worrying because they don’t have the wherewithal to service the debt if it goes beyond a certain point. They could then start getting into a debt trap situation.”
A solvent government must be able to finance its deficit in the long run. To be solvent, the initial debt stock has to be equal to the present discounted value of future primary surpluses. In other words, the present discounted value of government debt should fall to zero (or a minimum acceptable limit) as time progresses. While an increase in the real rate of interest increases the debt burden of any state, a higher growth rate reduces the debt burden when it is taken as a proportion of the GDP. Unfortunately, an increase in subsidies on non-merit goods such as freebies is going to make the fiscal deficit of any government unsustainable. There is now a consensus that subsidies on non-merit goods should decline, and those on merit goods should increase. While freebies may keep voters in oblivion and even blissfully happy.
The outstanding debt of the Delhi government has increased by over Rs 8,000 crore in the last ten years, the report tabled by Deputy Chief Minister Sisodia said.
Fiscal deficit is the difference between what a government earns and what it spends.
Delhi Government’s fiscal deficit is increasing year by year.
The government has plans to provide housing for slum-dwellers. Again, a noble idea. But before the government goes about this, it should be clear on how it plans to finance this. How much money does it intend to spend during the course of the year? Where is the money going to come from? All this will help the finances of the Delhi government to continue to look good. And a government with healthy finances can achieve much more by delivering what it has promised. And that’s the long and the short of it.