All exit polls have predicted a majority for the Aam Aadmi Party (AAP) in the Delhi Assembly elections with one of them giving it as high as 53 seats in the 70-member House. Sunil Jain, Managing Editor, Financial Express, says though the Delhi poll outcome will not be a referendum for the Narendra Modi government, but it would definitely be a reality check for BJP if the party fails to win in the capital.
“It will be interesting to see how AAP works with the Centre if comes in power,” says Jain, who feels the party’s manifesto has been more realistic this time around. He however expects AAP's reform promises to have an impact on companies like Reliance Infra and Tata Power.
Below is the transcript of Sunil Jain’s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.Latha: What do you make of the polls is this just a Delhi factor or will this be seen as the honeymoon of the government in Delhi?A: First thing we are assuming that Aam Aadmi Party (AAP) is going to win but let us go with that assumption since that is what all the polls are saying. It is Delhi factor it would be very premature to say that Modi’s sort of honeymoon is over. However, what it does do is, it injects a lot of realism into the whole BJP government. Right now the government sort of felt that it was this concurring state after state there is going to be no opposition. We saw some level of a realty check is been given by what is happening in the Lok Sabha and the Rajya Sabha for example the Rajya Sabha in particular. Delhi election is one more realty check. What it tells the government is, and I think this is a frightening part about Indian politics is a large part of the Aam Aadmi Parties appeal lies in some of the popular stock about electricity subsidies, water subsidies and things like that. So, it is a complicated thing because Arvind Kejriwal will have to deliver on his promises but for Modi what it means is that you cannot think that just talk of growth is going to get you buy. There has to be a deeper connect with people which is very important which the polls seems to suggest was missing. We have to see tomorrow whether that is true or not but that is really the realty today.
Sonia: What is the sense you are getting about whether these poll results will impact the Modi governments policy making because the BJP has said repeatedly in the past that this is not a referendum to the Modi government’s performance. What would your own analysis be?A: I do not think it is a referendum at all, what it is going to be a test of now is if you assume that Arvind Kejriwal becomes the Chief Minister of Delhi the question is how does the Modi government deal with him and also equally important how does Arvind Kejriwal deal with the Modi government. I can see a face off taking place in the Delhi police for example that was this big face off that last time. The question is does the Delhi Government sort of keep taunting the police and this Central Government back the police or does it get the police to fall inline. The power sector is the most interesting thing even from a stock market point of view that is what will determine what happens to Tata stocks or Tata Power or Reliance Infra. The thing is that we have got about roughly Rs 13,000 crore of regulatory assets and another Rs 10,000 crore on the way. So, you have got about Rs 20,000 crore or more of dues that need to paid to these power companies. These are dues which cannot be paid by the Delhi citizens. The power rate will do up too much. So the Central Government and the Delhi Government will have to sit down together find a formulation on this. One part could be possibly using APDRP funds to pay off some of this. The Aam Aadmi Party if you look at their white paper it was quite responsible but one of the things that comes out, one of the things that we have been recommending for a long time at the Financial Express is that try and redo these PPAs that these discoms in Delhi. Try and give the Delhi government a captive coal mine in a close by area so we can get cheaper power. Delhi has by far the highest tariff rates in the country. It is about a Rs 50 more than anybody else in most states. So, these are solution that the state and the Centre need to figure out together. It will be very unfortunate especially since Mr Modi has been talking about corporative federalism if there was a face-off.
Latha: For AAPs you said that their white papers were responsible but it still speaks a lot about water and power tariffs which are way below what is perhaps affordable by these entities. The important point is do you think it will have a kind of influence on the Modi government’s policies? If they perceive that this kind of populist policies is winning votes do you see them changing their rhetoric or changing their policies?A: You never know the last time that the AAP started talking about this we found two state government Maharashtra was one of them following suite in terms of promising cheaper power to people who consume less than a certain amount. The good thing here is that the next poll is many months away so hopefully by than the Aam Aadmi Party will also have got sense of realism. When I said that the Aam Aadmi Parties manifesto was a lot more realistic I meant it in relative terms. They still talk the audit of the discom and thinks like that. If you look at the way the AAP talked about in the past for example when they fought the elections the last time they talked about the 50 percent tariff cuts straight away so you did not find that kind of noise this time. So, it is more realistic for example the AAP has never ever talked about a bulk supply tariffs which is basically the tariffs which the Delhi’s discoms have to pay to government owned organisation like NTPC and NHPC. This is a first time I have seen a political party like the AAP being realistic that is what I meant. There is a danger there that if you see the Aam Aadmi Party winning because of its populism then there is obviously a rub off effect we have to hope that since the next election is many months away, Bihar is months away.
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