A few weeks ago, in a veiled attack on the Bharatiya Janata Party’s (BJP) political opponents, Prime Minister Narendra Modi cautioned people, especially the youth, against “revadi culture”, saying it is “very dangerous” for the country, its development and well-being. Modi said:
Aam Aadmi Party (AAP) leader and Delhi Chief Minister Arvind Kejriwal responded to the Prime Minister by saying:
The link between Delhi’s improved fiscal performance (despite its multi-governance system and clear separation of legislative and executive powers) and its better socio-economic performance in terms of access to basic education, healthcare, and employment-based guarantee safety nets has been established well and discussed before.
In Delhi’s AAP governance model, targeted social investments in basic healthcare, education, nutrition and access to drinking water, while meeting standards of quality and affordability, have had a positive multiplier effect on improving the overall human capital of the state. Let’s look at education as an example.
Under AAP, the government announced a 106% increase in government allocation to education in its very first budget. The increase in funds has allowed government schools across Delhi to construct over 8,000 new classrooms, and more than 12,000 classrooms have been upgraded with new amenities (for laboratories, conference facilities, etc).
Efforts have been taken to improve the in-class performance of teachers and staff, including an initiative to send more than 200 teachers to the National Institute of Education in Singapore for receiving pedagogical training.
Currently, there are over 300 Mohalla clinics where more than 212 lab tests, diagnostics and generic medicines are provided free of cost.
The improved quality of government schooling and primary healthcare in and across Delhi has created a positive image of the AAP as a ‘viable alternative’. This also helped the opposition party come to power in Punjab recently.
While the AAP did well in Delhi in terms of increasing access to basic education and healthcare, Uttar Pradesh’s own ‘double-engine sarkaar’ (Yogi-Modi combine), with its poor fiscal position and a high debt ratio, has failed to improve the state’s socio-economic performance in areas of education, healthcare and job creation.
Some may argue that a high state GSDP-to-debt ratio, particularly in a COVID-riddled scenario, may discourage states – even those as large as Uttar Pradesh and Bihar – from increasing their expenditure on socio-economic overheads and may rather push them to spend more on capital expenditure needs to generate more returns on invested expenditure.
The figure below shows that Punjab, Rajasthan, Kerala, West Bengal, Bihar, Andhra Pradesh, Jharkhand, Madhya Pradesh, Uttar Pradesh and Haryana are the states with the highest debt burden. These 10 states account for around half of the total expenditure by all state governments in India. Other vulnerability indicators also feature these 10 states. Their GFD-GSDP ratios were equal to or more than 3% in 2021-22, besides deficits in their revenue accounts (except Uttar Pradesh and Jharkhand). Moreover, in eight of these states, the interest payment-to-revenue receipts (IP-RR) ratio, a measure of the debt servicing burden on states’ revenues, was more than 10%.
And yes, it is true that a high public debt ratio adversely stunts the incentive to allocate more fiscal space to affected states for increasing social expenditure, say, in healthcare, education, job security, etc.
There are also a lot of questions on the transparency and accountability of fiscal numbers, in terms of outlay-ed and outcome-based budget indicators – it is difficult to know where public spend is outlay-ed for in the budget and spent for in the actual disbursements. Nevertheless, sustaining targeted social sector spending is also the only way for states – including those with weaker fiscal capacity – to employ counter-cyclical, Keynesian-style spending measures for higher growth and development possibilities.
I previously analysed these links with data-backed insights, arguing why the ‘welfare-driven’ model of governance followed by the AAP in Delhi is important.
Data showed that high government spending on social and economic development, which is also reflected in the governance models of the Trinamool Congress in West Bengal and the Left Democratic Front (LDF) in Kerala, provided an alternative ‘regional’ opposition to the BJP’s governance model, which has reduced its spending on social welfare, as seen in Uttar Pradesh.
Our Centre for New Economics Studies’s (CNES) Access (In)Equality Index (AEI) in 2021 observed how states like Delhi (despite its unique multi-party governance architecture), West Bengal, Kerala, or even Goa and Sikkim, perform better than Uttar Pradesh when it comes to access to basic social and economic services.Based on the score range of 0.67-0.23, states are grouped into three categories – ‘Aspirants’ (below 0.33), ‘Achievers’ (0.42-0.33) and ‘Front Runners’ (above 0.42). Bihar, Uttar Pradesh, Jharkhand, Assam, Odisha and Madhya Pradesh fall under ‘Aspirants’, which require sustained efforts to improve access to basic socio-economic opportunities across all identified pillars.
States such as Maharashtra, Arunachal Pradesh, Gujarat, Uttarakhand, Chhattisgarh, Rajasthan, Tripura, West Bengal, Manipur and Meghalaya are categorised as ‘Achievers’. These states have good provisions for access to socio-economic opportunities and must sustain their efforts to advance to the next category.
Lastly, states such as Goa, Sikkim, Tamil Nadu, Kerala, Himachal Pradesh, Telangana, Punjab, Mizoram and Karnataka are ‘Front Runners’ in ensuring better access to basic socio-economic opportunities for their respective state populations.
Delhi here was ranked as a ‘Front Runner’, too, with an index score of 0.49, while Uttar Pradesh had the second-lowest (‘Aspirant’) score of 0.28.
The frustration expressed by the youth recently in protests over the BJP’s Agnipath scheme both in and across Uttar Pradesh and in states like Bihar reflected unemployment, poor job creation and poor social development remain a core concern in Uttar Pradesh, as also in a few other states where the BJP is in power.
(Deepanshu Mohan is Associate Professor and Director, Centre for New Economics Studies, Jindal School of Liberal Arts and Humanities, OP Jindal Global University. He is Visiting Professor of Economics to Department of Economics, Carleton University, Ottawa, Canada. This is an opinion piece and the views expressed are the author's own. The Quint neither endorses nor is responsible for them.)
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