Universal electrification will remain a dream unless the government fixes the flaws in its much vaunted scheme to provide power to rural India
In his Independence Day speech, the Prime Minister made the statement that “when the UPA Government came to power in 2004, we had promised that we would provide electricity to all villages.” He then went on to say: “Our next target is to provide electricity to each and every household in our country in the next five years and to also improve the supply of electricity.” At best this is an oversight by his advisers/speech-writers and at worst a deliberate attempt to obfuscate what was promised in 2004 and the failure to deliver by a long margin.
The 2004 National Common Minimum Programme (NCMP) of the UPA government categorically stated: “Household electrification will be completed in five years.” There is no mention of providing “electricity to all villages” in the 2004 NCMP. The 2004 promise to electrify all households by 2009 has now become a target for 2017. Sadly, there is no supporting data that makes the revised promise even remotely achievable.
The 2011 census shows that 7.5 crore rural households still did not have electricity compared to 7.8 crore such households in 2001. As for urban households, 0.6 crore did not have electricity in 2011 compared to 0.7 crore of such households in 2001. At this rate, it will take several decades to electrify all Indian households. This dismal performance despite the much touted high GDP growth during this period and the much acclaimed Rajiv Gandhi Gramin Vidyutikaran Yojna (RGGVY) launched in April 2005 by essentially combining existing rural electrification programmes under a new avatar and raising the outlay. Trickledown economics is simply not working and the government’s ability to design and implement a programme that effectively uses RGGVY’s 90 per cent subsidy to deliver the desired outcome remains in doubt.
The files in the Planning Commission will relate a story of how serious issues were raised about the design of RGGVY and its cost estimates. It was repeatedly shown that RGGVY was deeply flawed on several counts and cannot deliver the objective of universal electrification. Alternatives that would, over time, become self sustaining were proposed and though some suggestions were incorporated, the flawed framework remained. RGGVY was presented in 2004 as an outcome of the NCMP with an estimated subsidy requirement of Rs.14,750. Planning Commission notes pointed out that RGGVY would not deliver the objective even with four times that outlay. RGGVY was given Rs.5,000 crore in the Tenth plan, 28,000 crore in the 11th Plan and the former Power Minister Shinde is reported to have sought Rs.50,000 crore in the 12th Plan for RGGVY. Even if this sum is made available, bringing the total subsidy outlay to Rs.83,000 crore (563 per cent of the 2004 estimate), universal electrification will remain an unfulfilled Indian dream.
Allow me to highlight a few of the problems with RGGVY. The first such issue stands exposed by the Prime Minister’s words from the ramparts of Red Fort extolling the virtues of RGGVY. He said: “And now almost all villages in the country have been electrified.” The veracity of this statement can only be established after more detailed data from the 2011 census comes into public domain. But more importantly, the statement, like RGGVY, ignores that village electrification does not deliver household electrification. States that declared 100 per cent electrification in the 1990s had up to 40 per cent households without electricity. Over half the households could still be un-electrified in villages declared electrified 10-20 years ago.
Currently, a village is certified as “electrified” if 10 per cent of the households are electrified in addition to electrification of all public structures such as schools, dispensaries, community hall, panchayat offices, etc, and the distribution infrastructure extends to the Dalit basti, if any. Thus while RGGVY has “electrified” some one lakh new villages; universal household electrification remains elusive. It was repeatedly pointed out that RGGVY’s objective must be aligned with the 2004 NCMP promise and RGGVY’s structure completely recast to push universal electrification and not just age-old village electrification.
No revenue model
Another repeatedly highlighted problem with RGGVY was the absence of a revenue model that ensured its sustainability. Single phase supply designed to meet the average monthly consumption of less than 20 units in rural households cannot be made economically viable without a heavy subsidy burden. The sick State electricity boards are unable to bear this annual subsidy burden. What is needed is to develop productive three phase loads that generate economic activity in rural areas. Such load intensification can make rural distribution more viable through the economic outfall. In fact, the bulk of the infrastructure being laid under RGGVY would need to be significantly augmented/replaced as and when our dream of Providing Urban Amenities in Rural Areas (PURA) is realised. So why not do it right the first time around instead of wasting money on a sham programme that does not deliver the stated NCMP objective? And before someone blames free power to agriculture, which is indeed a productive load, let me point out that reported agricultural consumption is 19 per cent today and we all know that the actual is much less because agricultural consumption provides a convenient proxy for theft of electricity by consumers required to pay. I support charging for agricultural power if quality power is made available when needed and if the price of the farm output can absorb it.
A third issue that remains unaddressed is where is the primary energy needed to support universal access? Building the rural distribution infrastructure without the ability to energise it is a recipe for de-electrification of the newly electrified villages — as has been the case in the past and is already happening with the newly “electrified” villages under RGGVY. Our confused policies on coal, gas, hydro and nuclear are coming home to roost and the current decentralised distributed generation schemes based on renewable sources such as wind, solar and small hydro are all driven by the safety of supplying the starving State grids that primarily feed urban loads.
Suffice it to say that alternatives were proposed repeatedly to address these and other shortcomings and while they did not guarantee universal household electrification in five years, they certainly provided a more sustainable framework that would have utilised the money spent better and potentially resulted in far fewer un-electrified households and actual electricity for electrified homes and productive loads. The primary beneficiaries of the current dispensation have been contractors and distribution equipment suppliers who have all pushed up the cost of rural electrification to unprecedented levels.
In conclusion, let me say that history will likely judge the past eight years harshly given the revelations that hit the news daily and the political mayhem that follows.
But one thing that is becoming increasingly apparent is how poorly his closest advisers have served the Prime Minister. No “political consensus” was needed to ensure that sane voices with fresh ideas, of which there were plenty, reached the Prime Minister and were given the time and analysis they deserved, especially in the critical energy and infrastructure sectors.
(The writer, formerly Principal Adviser Power and Energy, Government of India, is Visiting Professor, Lee Kuan Yew School of Public Policy, National University of Singapore.)