Two Arvind Kejriwals so far: Analysis

But even before the appearance of Citizen Kejriwal, we saw Populist Kejriwal announcing measures to give free water to the privileged, and not-yet-warranted cuts in power bills. And we even saw him justifying these actions during the trust vote when he said he saw nothing wrong in a free water scheme that may benefit only 400,000 or even 200,000 people. So what's wrong with that, he asked us, even as we were being bowled over by Citizen Kejriwal.

The Aam Aadmi Party's (AAP’s) supporters in the media used these bad decisions to laud Kejriwal for keeping his promises. During a honeymoon period, even warts look like beauty spots to lovers. But should we not stop to ask: which politician does not keep his freebie promises?

The rational counter to the assumption that keeping a promise is always a good thing is this: promises that should never have been made are worth wriggling out of. And promises that only involve handing out taxpayers' money to voters are not as important as delivering great governance and making fundamental long-term changes that will make our polity less corrupt and venal. How many media people would applaud the BJP if it came to power and decided building in temple in Ayodhya is its top priority – after all it has been making this promise in manifesto after manifesto? Would they laud the fact that the BJP is trying to keep its promise?

This is where Kejriwal’s apparent honesty is at variance with a deeper form of honesty that all politicians lack. If you have made a rash or dubious promise, real honesty requires you to recant and apologise, not go ahead with ideas that almost the entire media has criticised.

To be sure, some media commentators have even seen virtue in giving free water or cheaper electricity (clean water can reduce water-borne diseases, and cheaper power will enable the poor to be more productive, etc). A related argument is that by capping the amount of water given free, Kejriwal is actually enabling water conservation.

Neither argument holds water. These are, in fact, post-facto excuses invented to justify freebies. Giving anything free leads to wastage and corruption. If you want to conserve water, the best way to do so is to lower the threshold for free water, and have a progressive pricing system that penalises people who use more water. Thus, if you use 200 litres, the price is X, if you use 300, the price is X + 10 percent, and so on.

As RK Pachauri, Director of The Energy Research Institute, noted in The Times of India today (3 January 2014): “If something is given free, it will never be used efficiently. Give the poor cash transfer subsidy to reduce their burden but give incentives to use water more efficiently. Energy, food and water are closely linked — you cannot address one without looking at the other.”

He also points out that Gujarat had a better answer, especially in agriculture, where 80 percent of our water is used. “Drip irrigation could prevent a great deal of water lost in evaporation. Gujarat CM Narendra Modi set a good example by covering canals with photovoltaic panels that double up as water savers and power generators. They free land that would otherwise have been occupied by solar panels.”

As for the decision to lower power tariffs for those consuming less than 400 units a month, this single action of Kejriwal has probably set back the Indian power sector by at least another half-decade.

For two reasons: it was wrong of Kejriwal to presume that Delhi’s power distribution companies (discoms) were cooking their books even while an audit was being initiated. The right time to cut tariffs, assuming all his election-eve allegations against the discoms turn out to be true, is after the audits are in. By cutting rates on arrival in the CM's office, Kejriwal has essentially prejudged the issue.

The other reason is simpler: India’s power sector is bleeding profusely. It has accumulated losses exceeding Rs 2,50,000 crore and even today its annual losses exceed Rs 25,000 crore. And this is after more than 17 discoms hiked tariffs by huge amounts in 2012. A Credit Suisse report suggests that if state electricity boards (SEBs) keep raising tariffs by 10 percent every year for the next three years, they will just about break even.

In this context, it is more than likely that the so-called profiteering by Delhi’s three discoms is partly mythical – even though it may also be true that they are gold-plating their investments to claim higher returns (returns in the power sector are given based on the amounts invested, hence there is an in-built incentive to claim higher investments). The right corrective for this tendency is to change the pricing policy to reflect not claimed investments, but through a system of competitive tariff-based bidding linked to fuel prices.

Already, there are calls in Maharashtra to cut power tariffs, and in the run-up to the 2014 elections, Haryana has already announced rebates in tariffs. Haryana is where AAP plans to make its next big foray, and the political message that’s come from Kejriwal’s dubious moves is that power tariff cuts are vote-winners.

If this idea catches on, India’s (already weak) power sector reforms are DOA – dead on arrival.

Clearly, not only is AAP setting a bad trend, it also seems unaware of the reason why people are seeking to join the party today. If former Infosys CFO V Balakrishnan has joined AAP, it is because of the attraction of Citizen Kejriwal, not Populist Kejriwal who offers free water or cheap power.

The children and wealth-creators of post-reform India – from the IT wizards of Bangalore to the finance whizkids of Mumbai – are not attracted by Kejriwal’s anti-reform agendas in the power and water sectors. Nor would it be the case with slum-dwellers, who already pay for water and electricity.

To be sure, one can be charitable to Kejriwal. It is quite possible that he made the two rash promises on water and power when he did not believe he was a serious contender for power. Now that he is, he needs to become more honest and less populist.

If the Delhi audit truly shows up the power companies as crooked, they should be hauled up and made to pay for it. If their accounts are by and large kosher, Kejriwal should apologise and reverse the cuts. If the report is somewhere in the middle, Kejriwal needs to opt for reforms that make it less possible for power companies to cook their books.

In all cases, there is no need for subsidies from the exchequer. Citizen Kejriwal and Populist Kejriwal cannot attract the best and the brightest till the two are aligned. The Kejriwal we saw during the trust vote has to hold back the real dishonesty of the Populist Kejriwal who can't wait to offer his freebie to the electorate.

The writer is editor-in-chief, digital and publishing, Network18 Group