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Reforms

Apr 18, 2003
A new broom for India’s power sector

Ignored by most, India’s much reviled bureaucrats and politicians have just led the country past a major reforms milestone. It’s an event that will tame the wild electricity sector. The Parliament on April 9, passed the Electricity Bill 2001. When it finally comes into play, it will change all our lives for the better. A detailed review of how this came about is also an instructive look at how a giant democracy like India copes with major change.

First, why is the Bill important? Consider what has been going on all around us. Chronic power shortages, unaccountable Electricity Boards, surly staff, bankrupt state governments without the money to create new capacities, rampant power thefts, grandstanding politicians giving away free power to their vote banks and finally, the voiceless consumer made to subsidise all these shenanigans by being overcharged for pale brown, erratic supplies. And *this* India fancied itself becoming a superpower.

In the 1990’s when the first lunges at reforms began, India tried to create new generating capacities by trying what it called a ‘fast track’. It was in fact a sort of great leap forward without a thought-through, overall policy. The upshot of that leap was a lemon called by Enron at Dabhol, Maharashtra.

Smarting from that experience, about four years ago, a radical draft policy was written from the ground up. Many experts were involved and wide consultations took place. Then in 2001 a Bill was presented to the Parliament. And we were witness to a democratic process in action. 127 amendments were moved in the two year long debates. It saw the passage of two able power ministers, P R Kumaramangalam and Suresh Prabhu. R V Shahi a professional from the industry was brought in as Power Secretary. A Standing Committee of the Parliament held hearings to include the views of all stake-holders, particularly the labour unions. Strikes were faced and resisted.  State Government conclaves took place and commitments coaxed out of them. Of such stuff is consensus in a democracy is built. Pity, the system has not been applauded enough.

There is still some way to go, for sure. The upper house is expected to endorse the Bill on April 21. Presidential assent should follow soon after. Then a majority of India’s States will have to unbundle their monolithic Boards into independent departments for generation, transmission and distribution. A Regulator has to assume office. A power trading organisation is to be built. It is all at least another 18 months away.

But in the end, India will have reformed the power sector into a modern, competitive industry. Private investment is expected to flow in. Modern practices and transparency will come to govern administration. Thefts and graft will diminish. There will be an ombudsman to address consumer grievances. Cross subsidisation will go. Lively power trading across the country will end shortages.

Indians don’t linger long enough on the achievements made by a reforming India. Being droll and sarcastic about India’s abilities is almost a national pastime. Not many recall how they once needed ‘a contact’ to get a seat on the Indian Airlines or a train, how it often took access to a Member of Parliament to have a telephone installed, stock markets were scare alleys, all our banks were run by unionists or we waited patiently for shoddy cars to be delivered.Well, all those are in the past now. The power mess will too, soon.

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