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Friday, November 4, 2011

Rajiv Desai: Command-and-control system failure

If you ever needed evidence that socialist ideology, political populism and the utter lack of governance holds India to ransom, all you have to do is study the electric power crisis currently gripping India. For the past several weeks, the country has reeled from outages that last so long that they have become the norm; the few hours that electricity is available are the unusual occurrence. The gap between supply and demand is thought to be in excess of 15 percent on the average: ranging from zero in the case of Lutyens Delhi, which houses the ruling class, to more than 50 percent in rural areas.
India’s power crisis bears examination because it highlights the sheer inability of the public sector edifice to meet the demands of a rapidly growing economy. 
Let’s start at the source. The predominant fuel used in power generation is coal. The mining of this raw material is in the hands of a government monopoly, Coal India Ltd, widely regarded as inept and corrupt. Faced with rising demand for increased production, the company actually told the coal ministry that it is lowering its production target for 2011-12 by 4 million tonnes. Most analysts beli-eve when March 2012 comes rolling around, the company will report a much bigger shortfall. In the first half of the year, ended September, Coal India’s output fell short by 20 million tonnes. Simulta-neously, the government has been unable to secure assured supplies of natural gas or alternative fuels to mitigate the coal deficit.
Power generation is also largely a government monopoly run by similarly inept and corrupt public sector companies. Despite grandiose plans to increase power generation, the government will achieve only 50 percent of its target of the 20 years ending 2012. According to a Planning Commission official, if the power ministry had succeeded in meeting its targets, coal shortages would have been worse.
One of the risks of coal-driven power generation is environmental pollution. The agency in charge of ensuring this risk is mitigated, is the Union ministry of environment and forests, which in recent years has become a hotbed of populism. In 2009, the ministry announced a ban on all mining in forests and tribal areas. It also opposed hydroele-ctric projects in several parts of the country. Its views on nuclear power are also skeptical, led by fears of accidents.
Beyond that, because power supply is a concurrent subject, state governments are in charge of distribution to citizens. They supply electricity through state electricity boards (SEBs). Again, corrupt and inefficient, these utilities are mostly bankrupt entities. A 2001 Planning Commission report on the performance of these utilities says, “It may be noted that the information provided in the report is not always based on audited reports of the SEBs, as the accounts of many SEBs are audited with a considerable time lag.”
In several cities such as Mumbai and Ahmedabad, where the generation, trans-mission and distribution of power is in the hands of private companies, the cost of electricity is higher but the supply is reliable. I have lived in both cities and thereafter in the US, so my first experience of a power cut was in Delhi. Things improved dramatically in the capital after 1998, when the Sheila Dikshit government privatised power distribution. Just a drastic reduction in the huge (nearly 50 percent) “transmission and distribution” losses (theft) made more power available. 
India’s power conundrum provides a snapshot of the challenges policymakers face as they try to cope with the demands of a new India. The socialist command-and-control system simply does not work. As its hold diminished, businessmen and entrepreneurs have shown that without the dead hand of government bearing down on the economy, they can work wonders. 
But what the noted german social psychologist Erich Fromm called the “freedom from” moment, has passed. The “freedom to” moment of the modern economy calls for bold political leadership such as greater, crony-free privatisation and better-trained, more responsive and transparent government agencies.
Most of all, the burden has to be shared by citizens. This is not an area of focus in public debate. It’s not just politicians and bureaucrats who are responsible for taking India forward; citizens cannot absolve themselves from the responsibility of the “freedom to” opportunity.
Here’s what I mean: on a recent flight, as the plane landed and the seat belt sign went off, I was buffeted by a rush from behind as some passengers dashed for the doorway, hoping to disembark first. There was absolutely no reason to do this because in the end, we were all going in the same bus and we would arrive at the terminal simultaneously.  
My conclusion is that the men and women who sought to push their way up front were so focused on their personal agendas as to totally disregard their civic sense. It’s the same for the traffic on the roads, though the consequences are far more dangerous. This extends to paying taxes, avoiding bribes, evading building codes, littering, urinating in public and all the “me-first, devil-take-the-hindmost” attitudes that make it so hard to be a citizen in India, and transform public spaces into disagreeable environments.

(An edited version of this post will appear in http://www.educationworld.in, November 4, 2011.)