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No light at the end of the tunnel

There was a time in India when you could blame the government for everything that went wrong in public utilities such as telephone services, power or the railways.

india Updated: Apr 13, 2007 23:21 IST

There was a time in India when you could blame the government for everything that went wrong in public utilities such as telephone services, power or the railways. We must thank liberalisation for throwing up a new bunch of people to blame. Delhi Chief Minister Sheila Dikshit has held private distribution companies (distcoms) responsible for the current state of power cuts in the capital, warning them, as can be expected, of extreme steps. But Delhi is not the only state that is facing brown-outs. Maharashtra, too, is in the throes of a power crisis and so are some other states. A look at the details will make us feel more lost than enlightened. There is mention of peak demand and shortfalls, or of pulling power from the neighbouring states. In states like Maharashtra, there is talk of a shortage of supply and debates on tariffs and fuel costs.

For the country as a whole, there is a strong case to look beyond the details of each case and seek a general pattern. If fuel is in short supply, then it is the government’s job to unleash market forces that boost it. If distribution bottlenecks are the problem, the government should move in to create facilities that ease the pathways. Power distribution has been partially or wholly privatised in many areas, but the uneven nature of supplies and the power-guzzling nature of humongous cities like Delhi render the problem difficult. Also, collection of unpaid dues is a law and order problem that state governments need to address. Power thefts and transmission and distribution losses are not entirely the headache of private parties.

On the other side, the government will claim, rightly so, that it is doing this or that to increase supplies. However, the key points are whether the broader policies are in place to facilitate investments and profitability across states. The details are for bureaucrats to mull over and act on, but policy-makers need to give them sufficient clarity to take the decisions based on guidelines. In recent years, several states have set up independent power regulators, while the Electricity Act was passed to make independent merchant power producers compete in order to supply electricity to distributors. But it remains a glaring fact that political intervention, or quasi-political intervention, is the order of the day, be it for fuel linkages or tariffs.

True, power is a sector in which prices are politically sensitive, but, given that liberalisation is here and private parties need an incentive to invest and stay invested, policy-makers need to ensure utmost clarity. Here lies the rub: state governments must be willing to bite the bullet on power tariffs and raise them wherever needed. Ad-hoc methods will only lead to ad-hoc responses. One thing is clear: Like in most sectors, officials like liberalisation only when it involves the path of least resistance.