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Tuesday, November 15, 2011

India at the limits

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 to study the power crisis 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 power 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 for zero in the case of Lutyens Delhi, home of 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 the material is in the hands of a government monopoly, Coal India Limited, widely regarded as inept and corrupt. Faced with demands for increased production, the company actually told the coal ministry it is lowering its production target for 2011-12 by four million tons. Most analysts believe 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 fell short by 20 million tons.

Among other fuels, 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 achieved only 50 percent of its targets in the 20 years ending 2012. A Planning Commission official was quoted as saying that if the power ministry had succeeded in meeting its targets, the coal shortages would have been worse.

One of the key risks in the generation of power is environmental pollution. The agency in charge of ensuring that the risk is mitigated is the ministry of environment and forests, which in recent years has become a hotbed of populism. The ministry, in 2009, announced a ban on mining in forests and tribal areas. It also opposed hydroelectric projects in various 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 the distribution of power to citizens. Mostly, provincial governments supply electricity through state electricity boards (SEBs). Again, corrupt and inept, the utilities are bankrupt entities. A 2001 Planning Commission report on the working 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 certain cities like Bombay and Ahmedabad, where the generation, transmission and distribution of power in the hands of private companies, the costs of power are 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 privatized power distribution. Just the 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 faces 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 showed that without the dead hand of government bearing down on the economy, they could 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 privatization; it demands better-trained, more responsive and transparent government agencies.

Most of all, the burden has to be shared by citizens themselves. This is not an area of focus in public debate. It’s not just politicians and bureaucrats that 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 signs 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 at the same time.

My conclusion was that these men and women who sought to push their way up front were so focused on their personal agendas that they forgot their civic sense. If passengers disembark row by row, things get done in a much smoother and more pleasant way.

It’s the same for the traffic on the roads, though the consequences there are far more dangerous. This extends to paying taxes, avoiding bribes, evade 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 make the public space into such a disagreeable environment.

An edited version of this article appeared in Education World, November 2011.

Copyright Rajiv Desai 2011