Don’t make light of it

Coming as it did in a sticky season, the power shutdown will only precipitate the slide of India's image. Chanakya writes.

This has been a season of shocks. In every sense of the word. The severe power blackouts last Monday and Tuesday left 680 million people like me in the dark even as we were sweltering in the mid-summer heat. The northern grid collapsed in a domino sequence with no one sure of when it would hum to life again. It did eventually, but the losses in productivity, in human suffering, in infrastructure breakdown have still to be calculated.

More than the ACs tripping in our homes, it's the long power outages that have crippled operations in several corporate towers dotting the tony metropolitan suburbs that we need to worry about. Power blackouts aren't really the right calling card for any aspiring global economic superpower.

Bangalore, India's air-conditioned city, had factored in the value of power many moons ago. India's software industry learnt quite early that uninterrupted power formed the foundations of an efficient global back-office. It is better to set up your own captive units to keep the workstations running to fuel aspirations for jobs and prosperity among the middle classes. Likewise, up north, large generators are wheeling out power to keep the lights on and ACs running in plush buildings to beat the blistering heat.

I would be worried if I were in the government. Coming as it did in a sticky season, the power shutdown will only precipitate the slide of India's image. A power grid works in a manner similar to funneling salt to a small shaker from a large bag. Without the funnel, the salt will pour out. Grids collect extra electricity from power generating stations, which distribution companies transport to consumers.

So, what was behind the shutdown that dealt a telling blow to half of India already sweating under the collar? The technicalities aside, it boils down to the age-old Indian malaise: discipline, or rather the lack of it. Each state has a quota of power that it can draw from the grids. The quota is a function of a variety of variables, primarily the power demand in the state. The rules of the game define that each state cannot draw more power than its quota. If it wants more power, it has to buy it at a higher price. States are expected to stick to the drawn schedule and maintain what is called 'grid discipline'. Akhilesh Yadav, are you listening?

And come to think of it, truant rains played a big part in it. Scanty summer rains, already running 15% below normal, has spiked power demand. Worse, many power stations in India have just about a week's coal left to keep their furnaces burning to produce electricity, critical to keep the growth engine chugging along in Asia's third largest economy.

India's infrastructure deficit is obvious to the first-time visitor as well as to those well acquainted with the country. From overstretched airports to heavily congested roads, power cuts and strained capacity at ports, India's creaky infrastructure is in marked contrast to the rest of Asia.

Time and cost overruns have been a major bane for India's infrastructure projects. The government's own data shows how inadequate capital, environmental concerns, equipment shortages, bad weather and delays in procedural clearances have resulted in major slippages in large projects. As on September 2011, there were 72 projects worth more than Rs 1,000 crore that have been hit by delays, which in some cases, ranged up to 16 years!

Such data and avoidable mishaps like the power failures will only fill up the sceptics' quiver of arrows to run down the India growth story. The cynicism is not just about highways, power stations, ports and airports, but more about India's willingness to sustain high rates of growth and investment. From a foreign investors' darling to a slowing economy prone to risky policy flip-flops, the plunge of India's image has been as rapid as the sizzling growth it had once peaked at during 2004-08. Reforms are vital to finance the $1 trillion or about Rs 55 lakh crore — more than half the value of the national GDP — India will require over the next five years to overhaul its collapsing infrastructure, which, if built, could potentially catalyse every sector, from farm to factory.

It is critical that the government gets the basics right: improve governance, liberalise financial markets, ease procedural delays and, above all, implement strict punitive measures. That will not happen unless it creates a regulatory mechanism that enjoys the powers to crack down on offenders, including errant state governments overdrawing electricity from central networks. I can only hope that at the end of this tunnel, I do not find another tunnel. That would really cast a dark shadow on India's growth story.