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School for politicians

B.CLIP was featured this week in Open magazine, which includes snippets the lectures of Takshashila Councillor Prof Mukul Asher on public finance and municipal budgeting.

When he throws the floor open to questions, there are several. Predictably, in keeping with the zeitgeist, there is a question about the Aam Aadmi Party. A student asks if AAP can afford to give away free water and subsidised power to the residents of Delhi. Asher’s response is a question. “In the 21st century, what is going to be the commodity that will be the scarcest?” he asks. There is a murmur of responses, then someone gives the right answer: water. “If something is very scarce, would you price it at zero?”

Asher then explains that although a free-water policy may appear to benefit households at the outset, it would eventually hurt them. As water becomes scarcer, the cost of supplying it will increase. Therefore the only way the Delhi government can afford to give its citizens water free is by finding an alternative source of revenue—it can either take money away from other infrastructure projects, or raise water prices for commercial establishments.

The first idea is obviously a nonstarter. And if the government opts for the second, it would increase the cost of doing business in Delhi, forcing commercial establishments to move to other cities. Such an exodus would come back to hurt households, because they are customers and employees of these businesses.

Read the entire article: School for Politicians, Priyanka Pulla, Open.

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