Affordability versus public goods: Why politics tends to put everyone on the losing side of this divide

For Indian exports on the new list, tariffs came down to zero from 50%. They cover a wide range from fruits and nuts like mangoes and coconuts to processed foods like coffee and tea extracts (masala tea powders) and even vegetable waxes. In value terms, Indian agricultural exports to the US were valued at $1 billion in the pre-tariff era, roughly one-sixth of total agricultural exports by value.

The precipitating factor was not trade negotiations with the concerned countries, but recent election outcomes in the US to the posts of mayor and governor in assorted cities and states, in which affordability (read: tariff-hiked prices) was a major issue. It was the key platform on which Zohran Mamdani won his bid for mayor of New York City.

Fiscal revenue was the motivator of the earlier ‘reciprocal’ tariffs imposed by the US, contrary to announced reasons. In an informal conversation with press representatives on 14 November, the day after the tariff reductions, the US president is reported to have said tariff revenue would (still be enough to) enable a $2,000 payment to low- income American households to be announced next year.

Cash support to poor households is where the political needle universally points when it comes to combating affordability. It eases the budget constraint on basic private goods (food, transportation, housing). What about public goods; why do politicians think people will not agitate for those?

Just two days prior to the tariff announcement, a 43-day shutdown of the US federal government had finally ended, not because the key issue of affordable healthcare (subsidies for health insurance) had been resolved, but because air travel had been crippled by a lack of air-traffic controllers, who as federal workers were not receiving salaries during the shutdown and were increasingly absenting themselves from work on sick leave.

Monitoring the safety of air space is a classical public good, either available to all or available to none, and so it has to be publicly provided by the government of the day. It is an essential public good/service, a necessary complement to air travel, which is a private good bought and sold in markets.

This recent US government shutdown will be remembered not just because it was the longest ever, but because it pointed unerringly to the importance of public goods in shaping political processes—in this case, the actions of people’s political representatives.

In a choice between losing the healthcare subsidy in place and the restoration of essential public goods, the latter deservedly won the day—although the agreement reached is only an interim one going up to the end of January 2026. President Trump has now had second thoughts on the healthcare subsidy, so a final agreement covering the whole fiscal year may not be far off.

What of public goods in India; are they ever an issue for the electorate or their representatives? Delhi and the rest of north India in general suffer from world-renowned levels of air pollution every November, fuelled by assorted factors. Private solutions like air purifiers do not explain the lack of generalized public pressure for clean air. The Supreme Court decision to permit fireworks for Diwali in Delhi was not protested.

Public goods did not feature as an issue in the recent Bihar state elections, where, as in other states, the winning edge for the incumbent coalition is thought to have been a cash transfer to women ( ₹10,000 each to 10 million beneficiaries), with subsequent layers upto ₹2 lakh promised for an income generating self-employment project. That is a large commitment for a fiscally challenged state.

With the new cash transfer, Bihar joined 12 other states that make cash transfers to women at an aggregate cost of 0.5% of GDP (PRS report on state finances for2025-26).

However, the generally high standing of Bihar’s winning leadership (over a 20-year period of changing coalitions) stems from its earlier record on public goods such as law and order, roads and public health. Some of that became remarkable only because it started from a pathetically low base. Whatever, the electorate seems to see those public goods as already wired in, and therefore not reducible or erasable.

But public goods call for continuing revenue expenditure, not just initial capital spending, which can be incurred and then forgotten.

Poorly maintained roads collapse and lead to rising fatalities. Unfilled police vacancies lead to deteriorating safety in public places. Maintenance manuals for sewage pipes are given the go-by without the requisite budgetary allocation, resulting in sewage contamination of drinking water. Vacancies in pollution control departments allow unmonitored construction and industries to spew pollutants into the air and leach toxic contaminants into groundwater.

The disease burden goes up as a result, without a concomitant expansion in accessible health facilities.

The fiscal trade-offs between public goods and cash transfers must enter the electoral discourse if people wish to see a durable improvement in their well-being.

The author is an economist.