Exactly a decade-and-a-half has passed since the ‘landmark’ legislation meant to transform the power sector was brought in. The grand objective of the well-intentioned Electricity Act, 2003 was the creation of a free market for power in which energy companies have the freedom to generate power from anywhere in the country and sell to any consumer at prices determined by the market, and the consumers have the option to choose their supplier. Fifteen years down the line, such a free market remains a pipe dream.
Hurdles of the mission
Why so? The answer, in one word, is: politics. Political imperatives make radical reforms practically impossible. Political masters have tried to shape reform measures in a manner that would avoid a negative fallout for them.
Wrong approach, says the book, Mapping Power: The Political Economy of Electricity in India’s States , an anthology of case studies in the power sector in 15 States, edited by Navroz K. Dubash, professor at the Centre for Policy Research, New Delhi, Sunila S. Kale, faculty member at the Henry M. Jackson School of International Studies, University of Washington, Seattle, and Ranjit Bharvirkar, Principal at the NGO, Regulatory Assistance Project. The articles, one on each State, provide a peek into the political history of the power sector with a view to finding out how, and to what extent, is politics entwined with power policy. The authors of the articles have prepared their work researching archived material as well as interviews with experts. The intent of the book is made clear in the first few pages. The authors note that a common thread running through past reform measures is the ‘impulse to bypass or insulate’ the sector from politics. “This impulse, we argue, is misplaced.”
The subsidy factor
The fundamental point of the book is this. The power sector (though to different degrees in different States) is beset with problems such as corruption, need to provide subsidised power to the under-privileged, theft of power and poor health of the State-owned power supply companies (discoms). All these issues are deeply political. If you bury your head in sand and bring in reforms — such as UDAY — the outcomes at best will be positive only temporarily. Instead, look for solutions that will give politicians political pay-offs.
Beyond stressing that ‘mapping power’ — which means, “the need to understand the power sector’s role in both shaping and being shaped by electoral politics, the extent to which efforts at reform work with or against existing political currents” — the book does not offer any specific prescriptions as to what reforms the governments should undertake in order to obtain positive political pay-offs. “The intent,” the authors say, “is not to provide a mechanistic toolkit, but rather a framework for dialogue and understanding of how to map power, which is the first step to productively reforming electricity politics.”
The 15 articles serve as a one-stop shop for information about the power sector’s tryst with politics and are quite interesting. For instance, under ‘Delhi’, (written by Megha Kaladharan, a lawyer) there is a fairly detailed discussion on Aam Aadmi Party’s arm-wrestle with Lieutenant Governor Najeeb Jung, the LG holding the appointment of the State’s electricity regulator, Krishna Saini, invalid; the consequent paralysis in the electricity distribution sector, all leading to tariffs remaining static and worsening of the discoms’ financial health.
Writing on Gujarat, Siddharth Sareen, a post-doctoral fellow at the University of Bergen, Norway, shows how the single party dominance of the State and the attendant political stability shaped the evolution of power sector. “Reforms have changed it from an ordinary State electricity board to a sector whose performance has been consistently outstanding at a national level.” However, this is not to say that all is hunky-dory. The sector may have reached a ‘stable but a suboptimal equilibrium’. The negatives include banking on short-term trading at the power exchange as a protectionist measure that favours discoms at the expense of industrial consumers, caps on solar, and failure to promote sufficient public engagement.
The case of Tamil Nadu
Another interesting case study is that of Tamil Nadu, by Hema Ramakrishnan, faculty member at the Madras School of Economics. She traces the evolution of populism and corruption. In 1988, the AIADMK government discontinued metering of agriculture under the pretext that while recording incurred a lot of expenses, it did not earn any revenues from agricultural users. With no metering, farmers started exploiting groundwater indiscriminately, using multiple pumps and choosing water-intensive crops. Traditional crop rotation methods were replaced by cultivating paddy for all three seasons. “Supply of free power for agricultural and low income consumers provided a convenient cover for the State to hide theft and inefficiencies,” says Ramakrishnan. This, in turn, helped financial and political rent-seeking by the party in power.
In as much as it zooms-in into the relationship between politics and the power sector in 15 (big) states, the book is timely and useful, because the Electricity Act is going nowhere. However, it’s disappointing that there is no clear-cut recommendation on what policy makers should do.
Asked about this, Navroz Dubash told The Hindu that the book shows how State-specific the problems are. “Our call is for State-by-State solutions.” While there are commonalities across States, “For us to provide a silver bullet single-point solution for all States would have fallen into the same trap we warned against.”
Mapping Power: The Political Economy of Electricity in India’s States ; edited by Navroz K. Dubash & others, Oxford University Press, ₹1,195.