Delhi was created post-independence as a result of the States Reorganisation Act in 1956. Back then, it was termed as a Union Territory (UT)- under the direct control of the Central government. Logically speaking, it made sense. Since Delhi consists of the national capital – New Delhi, the Parliament, the Supreme Court, 7 Race Course (home of the Prime Minister), and the Rashtrapati
Bhavan (home of the President), it is of great national importance and warrants Central involvement. But the problem started in 1993 when Delhi was converted into a city-state and its first local government (elected by Delhiites) was instated. Ideally, a UT has no local government and its administration is handled by the Centre alone. But Delhi’s case is different.
Prior to 1993, administration of the country’s capital was a mess. Naturally, the Centre had national issues to deal with, so Delhi’s local governance wasn’t prioritized. So in 1993, its administrative powers were divided. Delhi came to be ruled by two heads – the Chief Minister (CM) and the Lieutenant Governor (LG). The idea was that segregation of power would improve governance. But it didn’t. And that’s when the demands for statehood started erupting.
Since both the CM and the LG may not always be from the same party, as in the current case (Arvind Kejriwal – AAP and Anil Baijal – BJP), clashes are bound to happen. So much so that sometimes LGs are replaced (like Najeeb Jung) or CMs resign (like Arvind Kejriwal), due to increased friction. This has hampered the region’s functioning, making statehood seem like a very viable solution.
Delhi’s demand for statehood has been going on for so long that there’s very little focus on what will happen if this demand is met. Surely the newly formed state won’t settle as fast as Telangana did.
The new power-sharing can lead to smoother governance
Here’s how Delhi’s powers are divided.
Statehood will force a realignment of these powers.
As of now, Delhi’s legislative powers lie with the LG and its executive powers are with the CM. This literally means that policymaking in major departments like land, water, security and infrastructure is done by the LG, whereas the CM is left only with the task of executing these policies.
This unequal system will not survive when Delhi becomes a state. It will then be entitled to all the rights and responsibilities of a state, which includes handling its own security and development. The police force will thus have to report to the CM instead of the LG, all bills for development, like the Jan Lokpal Bill, the Minimum Wages Amendment Bill and the School Education Bill can be passed by the CM without Central intervention. Delhi will also be able to make its own policies regarding development, properties and prices. This means that Kejriwal will no longer have to hold sit-ins at the LG’s office for permission to construct medical clinics or provide ration delivery to citizens.
Come to think of it, if statehood were given earlier, it would have avoided so many tussles between CMs and LGs in the past; like the Sheila Dixit vs. Tejendra Khanna (2011) fight for property rates and Madan Lal Khurana vs. PK Dave (1993) for water prices.
But the newfound governance freedom will come with a catch. Firstly, it will take years for the statehood transition to take place. Setting up new administrative bodies and dividing power will not be easy. Even Telangana has been given 10 years for this change. And secondly, statehood will increase Delhi’s annual costs, which will require a huge appraisal in its budget. How?
Finances will be under serious speculation
The result of statehood: Delhi will have to finance its own governance.
Let’s take the police force, for example, since the IAS strike was the peg of Kejriwal’s recent protests. As the police currently reports to the LG, it is fully financed by the Centre. This means the cost of police training, equipment, postings, etc. are all borne by the Centre. But with statehood, Delhi police will come under direct orders and control of the CM, so the latter will then have to pay for it. And Delhi’s security is not just for the locals, the police also guard government buildings, MLAs and other dignitaries. Since Delhi has more VIPs than any other state in the country, and at least 3 cops are protecting each VIP, its outgoing on security is also the highest (Rs3870 crore as compared to Rs650 crore in Mumbai). Will the state be able to bear such a huge cost on its own?
Similarly, there are a lot more resources and facilities that Delhi will have to bear when statehood is given. This includes the cost of buying power and supplying electricity, setting up government schools and colleges and conducting national and state level exams. All of these – which account for more than 50% of Delhi’s total costs – are currently paid for by the Centre. And the latter is already providing day-to-day facilities at nominal costs. For example, the current household electricity rates in Delhi are already 50% subsidized, and can’t get more staked than this without the government incurring more losses.
But if Delhi becomes a state, setting up anew, owning power plants is highly unlikely for the state government. It’ll be way too expensive and an increment in Delhi’s budget allocation is a clear post beyond the foggy way. The state will have to pay to buy power from its own revenues. And this will mean an inevitable hike in indirect taxes, including water tax, electricity rates, toll fees, parking rates, bus fares and more expensive metro rides – all of which will directly affect the residents. How?
Delhi will lose a lot of land
Delhi’s housing is pretty cheap as compared to that in cities like Mumbai or Bangalore. But as a metropolis, Delhi also receives the highest migrant workers every year. With an increasing population and limited land available, how will the state contain its people and productions?
You see, Delhi’s NCR region is actually a part of the surrounding states of UP, Rajasthan and Haryana. These are highly industrialised areas (Noida, Ghaziabad, Gurugram), which were brought under Delhi’s greater region only because of the Centre’s mandate. Without Central control, these states will have no motivation to let parts of their region be governed by Delhi’s local government. As a result Delhi will lose at least 30% of its land, making it even more difficult to provide housing for its populace. It’ll have to increase land tax and redevelop open areas or smaller buildings into skyscrapers, just like in Mumbai. Of course, this will considerably hike property prices.
Researches suggest that Delhi receives $53 billion in GDP from the NCR region and by losing it, the state’s revenue will reduce by at least 12%. Low revenue, growing housing rates and increasing cost of other facilities will have far-reaching impacts on the residents.
Implications of a tax hike
The single task of buying power or setting up new plants can have direct implications for multiple resident facilities. Public transport like buses and metros that run on petrol or electricity will become expensive. Manufacturing of goods (since heavy machinery works on power) will become costlier thus hiking the retail prices. Even home electricity bills will increase, inevitably hampering Kejriwal’s promises of subsidized power bills.
Not just this, but Delhi relies heavily on Haryana and Uttar Pradesh for the supply of raw water. As of now, they’re providing water because of the Centre’s orders. But after statehood, opposing parties in these states may create issues over supplying water at low costs.
Speaking of companies, an increase in their manufacturing costs (due to high power and water rates) will lead to a direct hike in retail prices of products. Because if they don’t raise prices, their profits will be cut which will, in turn, cause a reduction in employee salaries. Either way, it is the working class that will suffer from a lack of purchasing power.
Delhi’s statehood demands are viable in terms of local governance and bureaucracy – maybe it’ll help reduce VIP culture and improve local security. But in the end, every single citizen will have to pick up the cost of Delhi being a “state”.