Hypothesis:
AAP is like a
disruptive startup, which pivoted between AAP 2 and AAP 3. They are targeting
the section of voters for whom pricing of every day services & goods is
key. Eg. users of Metro, bus, Mohalla Clinics, School etc and for whom free
electricity, free travel , free water, brings in immediate value from wallet
savings.
In India, these users
form a significant % of the population, especially those who are working as
salaried employees. Service Sector is the highest employer in Delhi and
contributes 83.6% of the GDP. While per capita income is 3 times the National
average, any employee would benefit from additional savings from freebies.
Having retained his
core base, now AAP is moving up the customer pyramid by appealing to middle
class and upper middle class voters with promise of harmony in addition to more
money in the wallet.
The opposition
parties continued with themes, which the middle and top of the pyramid identify
as voting priority - viz National Security, CAA, Ram Mandir, but possibly
viewed as lower in the priority by the lower middle class, as against money in
the wallet.
This meant AAP,
meanwhile added the upper middle class voter to its traditional lower middle
class and crossed 50% of the total vote. Someone in AAP has been reading Clayton
Christensen.
More Income to Spend as migrant population
increases: Voter base grows slower than rest of India:
Interestingly, Delhi
earn its tax revenues from GST - 38% and 31 % from VAT (liquor and fuel sales)
. As more people migrate to Delhi, its tax revenue continue to increase. By
avoiding corruption in Govt tenders, GST continues to rise. Therefore, AAP has
money to spend on Free Electricity, Free Metro, Free Water and Mohalla clinics.
The logic is: Make it easy for people to transact their time and consumption.
The GST income will cover for easing transaction costs. Eg. I would eat at
restaurants if I saved on travel.
Unlike other states,
which spend 3 % ~ 6.5 % of Revenue on Police, in Delhi, the Central Govt takes
care of security expenditure. Delhi is 13th on the list of GDP for states in
India and has about 1.8 Crore population and income of 61,000 Crores. In
comparison, Chhattisgarh has 2.8 Crore population and Income of 31,000 Crores /
Haryana 2.7 Crore population & 70,000 Crore income and Punjab 2.98 Crore /
52,000 Crore Income.
In addition, the
other benefits that Delhi gets yearly are around 750 Crore as central
assistance and central funding of JNU, IIT etc. central institutes. So for AAP
to spend on Mohalla Clinics / Free transport is not difficult, but a very smart
decision to consolidate their voter base.
Given the count of Central Govt
employees & transferable non-voting Security & Armed Forces personnel in
Delhi – serving & retired - who contribute to GST, but no burden on Salary
or Pension, Delhi's income will continue to rise and so will freebies. AAP
should win the next 2 terms at least until Arvind Kejriwal is 65 years, since
once a voter is used to freebies, they will not give them up. Hence, the
emerging bromance & photo-op by AAP with BJP as AAP has no need to disturb
a symbiotic relationship by picking up issues, which do not contribute to
Delhi’s income. Eg. CAA, Article 370 etc.
Finally, while the population of
Delhi will expand, the voter count at election time will not increase
significantly – voter apathy and transaction costs of getting an updated EPIC/
voter id card for a migrant are quite high. You need to delete and update by
diving into the depths of Indian Govt offices across regions. Never happens.
Conclusion: Migration to Delhi is an option to cut down on
Transportation, Health and Education costs, if the tradeoff impact of air
pollution is manageable. Compounded savings in income, over 10 years can be
significant, with in-tangible upside of living in the Capital city of the world’s
largest democracy.
