Friday, January 17, 2014

Aam Admi Party (AAP): An Economic Evaluation


   In the election to the Delhi State assembly, AAP emerged as the second largest party and formed the government with the help of the Congress party.  As far as Delhi is considered it should have 4-5 years till the next election to demonstrate its abilities.  However, it has already declared its intention to enter the General elections in a big way.  So the public has the right to use all available information including the utterances of its leaders, their personal actions and its performance so far in Delhi, to make a judgement about its national potential!  Given its outsized ambition one is forced make quick judgements about it from the available information.

Anti-corruption Crusade

   The most positive feature of the AAP is its declared objective of attacking corruption in Public life and the Bureaucracy.  In fact one could call this its USP to the urban voters, particularly the urban middle class, who are fed up of the harassment and corruption. The appeal of this issue encompasses the poor who face the brunt of the corruption of the lower bureaucracy and its overbearing attitude towards the citizens who they are supposed to service.  It also touches the small business man who has to deal with extortion, corruption and inadequate public services on a daily basis. Thus this issue cuts across all classes and unites them. Given the origins of the AAP leadership in the Anna Hazare movement for probity in public life and against corruption, it has a certain amount of credibility in this respect.  However, this goodwill is not likely to last till the general election, unless it is able to demonstrate that it can bring the corrupt (who it had so vociferously attacked when in opposition) to book and make a visible difference in the extent and degree of corruption in Delhi.  It should keep a lazer focus on this issue, introduce the promised Lok Ayukt bill and show how a reduction of corruption can lead to an improvement in the quality and volume of services provided (including for example in the incidence of rape & water-sewage-sanitation).  Given that estimated fraction of corrupt payments on virtually all government expenditures ranges from 30% to 50% this is far from impossible!

Correctable Weakness

Constitutional & Govt. Rules

 Having never run a government before, the public statements and actions of several AAP ministers seem to display a weak understanding of government systems and procedures, though this cannot be said of Mr Kejriwal a former IRS officer. This is however, correctable with a little serious effort to listen and understand Governmental systems and procedures with an open mind (instead of suspecting every interlocutor to be corrupt).  These include the constitutional separation of powers and responsibilities between Center, States and localities (Nagarpalikas and Panchayats), between Government, Judiciary and other institutions and between ministers and their secretaries. Some of AAP’s  leaders also have to understand the complexity of government decisions. Most major decisions  have positive and negative effects on different sub-sets of voters. Any such decision will therefore have to be judged by its net overall effect.  This is an assessment that political leaders have to make.  It cannot be decided by mohalla sabhas, by those who agitate and shout the loudest or through pols & referendum.  Voter interaction is highly recommended for understanding public problems and concerns, but not for making decisions that affect many sub-groups, some positively & others negatively.


         There also seems to be an excessively individualistic approach to corruption, with little thought or understanding of the pervasive and systemic nature of corruption in India today.  The AAP leaders have identified a set of “bad guys” in politics and business and posited themselves as the “good guys”.  It is assumed that once they the “good guys” replace the political “bad guys” and go after the “bad guys” in business most of India’s problems will be easily sorted out. This self-righteous approach, earlier seen in the V P Singh anti-corruption campaign, is extremely naive!  Though trial & punishment of the corrupt has important signalling effects, an anti-corruption campaign is unlikely to be sustained in the medium-long run, unless systemic improvements are made. This includes institutional improvements like the Lok Ayukt bill, police and bureaucratic reform and economic policies such those related to land use, auctioning of government land and public transport & parking, that create incentives for honest behavior.


        From the past statements and behavior of the AAP leaders, their academic contacts  and the kind of prominent personalities that these leaders have invited & enticed into the party (as against those who applied and/or requested to join it), one can discern two  potential negatives in this party.

NGO Ethos

       Given the background of the original leaders (as well as of the prominent personalities they are trying to attract into the leadership) in the NGO sector, they share the micro-specialized approach of these NGOs. Most of the activist NGOs operate at the village or mohalla level and have a good idea of the problems faced by the local people. To the extent that problem and solution is purely local they can contribute to the solution, even though the issue of scalability is often ignored -success depends on every locality have the same quality of leaders who are just not available elsewhere. But when any potential solution has repercussions beyond the locality to the district, State or Nation, their approach is often too narrow to offer a viable & sustainable solution. In other words such NGOs usually lack an understanding of broader macro issues and often act betray a self-centered arrogance towards other equally well -meaning experts!  There is thus a serious danger that the AAP will rapidly deteriorate into a Federation of NGOs with narrow interests, thus bringing the worst features of the NAC right into the government, with not even a cabinet system to limit the macro damage to an indulgent list of micro policies.

Leftist Ideology

     Many of the academics, intellectuals and think tankers associated with the AAP leadership appear to be leftist adherents of State Socialism with an ideological distrust of markets.  They seem to have learned little from the 30 years of Nehru-Indira socialism and the LPQ Raj from 1950 to 1979.  They even refuse to believe the fact that the real per capita income (Pc GDP at PPP) in India declined progressively from 29 per cent of World average to about 20 per cent of World average during this period. In other words, the ostensibly pro-poor Socialism reduced the Welfare of the average Indian relative to that of the average World inhabitant by nine per cent points (or 30%).  There is therefore a serious danger that an AAP government would re-introduce failed policies, which put the economy back on a lower growth path with serious adverse consequences for growth of job opportunities and public welfare!


   The Aam Admi Party (AAP) has stirred up the political system by showing that an underdog can come from nowhere to second place finish in India’s capital.  Its anti-corruption plank makes it a good candidate for running urban local governments, where it could demonstrate the positive effect of reducing corruption and thus generating better public services as well as saving money that can be used to transform service delivery.  However, given its NGO origin & character and leftist, State socialist ideological baggage (that it seems to carry), it could be an uncertain proposition at the State level and downright dangerous at the Central government level. 
    This judgment can and will need to be reviewed, If and when AAP is able to establish a track record of good policies and governance.

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