Full statehood for Delhi is a double-edged sword. It is not the panacea Arvind Kejriwal thinks it is. But if he reworks his plan on how to grow Delhi, he can surely make a pitch for full statehood

Be careful what you ask for, because you just might get it. Mohammed Ali Jinnah demanded a separate Pakistan for Muslims - and he got one, a "moth-eaten" one, to use his own evocative expression.

Arvind Kejriwal is perfectly within his rights to demand full statehood for Delhi. And there is no reason to deny it to him. Why should Delhi not get powers what other states automatically get? But Kejriwal should also know that, like Jinnah, he will get a “moth-eaten” Delhi. If he understands that, then Narendra Modi should give it to him.

Like Beelzebub's famous quote in Milton's Paradise Lost, Kejriwal may well reckon that it is "Better to reign in hell, than serve in heaven." Not that Delhi is any kind of heaven right now for anybody except the Lutyens elite, but it is less of a hell because it gets more taxpayer resources than any other city in India.

Here's why full statehood means a moth-eaten Delhi, and why Kejriwal's party may also be the wrong one to run it, unless he changes course:

Delhi is by and large a city-state. But it is also the capital of India. Since it is not possible for the central government to come under a state government's administrative jurisdiction, it automatically means that Delhi has to be bifurcated if one part of it is to receive full statehood. There is no way any central government will allow a state to control its offices, establishments, cantonments and services.

So the first implication of Kejriwal’s demand for statehood is bifurcation. And by bifurcation we mean not just geographical bifurcation, but bifurcation of all the services provided to the citizens of united Delhi: the police, the land development authority, the water-works, everything.

So the Delhi police will have to be split between the new full state of Delhi and a central autonomous mini-state that will constitute the national capital (which will house all cantonments and central offices, including the country's president, the Prime Minister, the MPs, the ministers and the bureaucracy). It will also mean splitting the Delhi Development Authority, and a new water sharing agreement involving the two residual entities, among other things.

To be sure, some kind of bifurcation already exists - but it is horizontal in nature - with police and land being run by the centre, and municipal and other services by the state. What Kejriwal is demanding will merely make the bifurcation vertical - a separation of centre from state, geographically, resource-wise and emotionally. Kejriwal’s full-state Delhi will not be today’s Delhi.

But there are other implications of demanding full statehood that Kejriwal should be aware of before asking for the moon and sixpence.

First, as a full state of the Indian Union, Delhi will no longer be eligible to live off the central government's current subsidies. The rest of India can pay to run a central government, but not another state government, including its police. Delhi is India's richest state, and thus has to rely on its own resources for growth and to provide services to its citizens.

Second, apart from Delhi’s value-added taxes, the primary revenue earners for a city-state are taxation of services, entry, exit and parking charges on vehicles, and property. Land rents, annual property taxes, and vehicle taxes will have to go up when Delhi achieves statehood. This is because in future, Delhi will have to pay for its own law and order costs, including policemen. More money will also have to be raised for investing in public transport. The Delhi Metro will have to charge more or be subsidised by the state.

Third, city-states cannot be traditional manufacturing centres as they will be unviable and polluting. Cities tend to attract higher wages than non-urban centres, and this automatically means only high-value adding, automated manufacturing or non-polluting industries and services can be set up there. But these kinds of jobs need skilled manpower and a knowledge base, which means attracting high-income knowledge workers and not the hoi-polloi of the rest of India. But these are precisely the people (the Poorvanchalis, the minorities) who lifted Kejriwal’s mandate from a sedate majority to an overwhelming one. The underclass has a bigger claim on his resources than the middle and upper classes – but it is the latter who will build the new Delhi.

Fourth, city-states need different governance structures compared to normal states with a mix of the rural and urban. No successful city-state can attract talent and skilled workers without running a very efficient, corporatised form of government. But Kejriwal has been talking just the opposite: empowering "gram" and "mohalla sabhas” that can realistically decide only things like where to store the garbage or stop a neighbourhood brothel. Mohalla sabhas cannot become the driving structures of an urbanised, knowledge-driven future state which may continue to receive a huge influx of underfed, illiterate, and unskilled or semi-skilled migrants. It is a recipe for chaos.

Delhi will have to think of a corporatised and top-down governance structure like Singapore or Shanghai. It needs a CEO – which Kejriwal can surely provide, but this is not what he has been talking about. The only city-states that work are those that can centralise and optimise decision-making powers and deliver world quality public services, especially in a super-diverse city like Delhi. Delhi’s babu culture is particularly unsuited for a city-state, and mid-level babus voted for Kejriwal. Is he going to take them on?

Fifth, statehood for Delhi means Kejriwal will be a net buyer of power and water from outside. This is already the case, but if power and water has to come from elsewhere (other states) and shared with the central administrative district run by the home ministry, it cannot be subsidised. Delhi can set up its own power plants, but these will have to be based on clean gas or renewable sources - both more expensive. Coal-based power will have to be bought from other states - at market rates.

Full statehood means Kejriwal will have to abandon his dreams of cutting tariffs for power and giving free water to all and sundry. A rich city-state can afford to pay, and it should.

Sixth, as a city-state which is hemmed in by three other states, Delhi will ultimately run out of land. The benefits of Delhi's sprawling growth will go to the contiguous states of Haryana, UP and Rajasthan - as it already does - and Delhi's residential growth will have to come vertically. This means Delhi has to think Singapore, not spatial growth.

All of this can be done. It all depends on whether Kejriwal wants to run a city or a state.

I am the last one to believe city-states cannot work. They do. But it needs a different mindset to run – the mindset of a corporate CEO, not a populist rabble-rouser. City-states are capable of generating enormous value for the whole hinterland if they are run well and autonomously (read what Firstpost wrote about the subject earlier, in the context of Mumbai, another mega-city that needs full statehood to flower).

So if Arvind Kejriwal wants full statehood for Delhi, he has to rethink and reboot his party and his own approach to governance. It would also be a welcome shift.

All hail Arvind Kejriwal, CEO-Mayor of the city-state of Delhi?