Monday, September 20, 2004


Times of India, Sept 19, 2004

Some say that the last government’s great triumph was to open a dialogue with Pakistan; others think it is our dramatically improved relationship with America; still others point to the success in building highways. But I say Vajpayee’s crowning feat was to unleash the telecom revolution, which has done more to improve the Indian citizen’s daily life than anything else in the past five years. This is how history remembers great leaders—by one big hit. We remember Lincoln for abolishing slavery, Churchill for defying Hitler, Gandhi for India’s Independence.

What will be your ‘big hit’, Dr Manmohan Singh? I suggest your path to glory lies in electric power. Nothing diminishes us Indians more than our power shortages. They make a mockery of our lives and remind us daily that we are a third world country. If you could usher a power revolution in the next five years, all Indians would love you and re-elect your party. It will not be easy, however, because the action here, unlike telecom, lies in states.

Our telecom success holds two lessons for power reforms—one, the crucial importance of competition; two, reforms cannot be entrusted to the incumbent. For ten years the Department of Telecom used every trick in the book to retain its monopoly. Finally, Vajpayee got so disgusted--he virtually removed the reforms out of the ministry. He appointed a group of ministers headed by Jaswant Singh, which made the crucial decision to switch from licence fees to revenue sharing. In one stroke this made the private companies viable, who began to compete like crazy, rapidly multiplying telephones and dropping prices to unbelievable levels. The rest, as they say, is history.

Similarly, the power ministries in the states and the centre will not bring in competition. This is not because they are bad people, but because they are protectors of their State Electricity Boards (SEB), NTPC, etc. It is like asking Tendulkar to be player and umpire at the same time. Or a thief to be defendant and judge! This has been the fatal flaw in our reform process, which explains why our reforms are so painfully slow.

Fortunately, the excellent new Electricity Act 2003 is committed to open access and competition. It encourages anyone to generate and sell power to anyone, thus liberating us from the monopolistic clutches of the SEB. The same thing is happening around the world, as country after country is breaking the monopoly of its utilities, with the result that services everywhere are improving and rates are declining. It is not happening in India because our states are not implementing this fine law. Admittedly, the law gives them five years to give open access, but they will use every trick to subvert this reform. They don’t want to lose a cash cow that lets them give free power to farmers, connive in power theft, and benefit from huge SEB purchases and contracts.

Alas, Dr Manmohan Singh, you will have to take away power reforms from the power ministry, and execute a tough carrot and stick policy that will force the states’ hands. The PM’s committee to monitor infrastructure progress, I fear, may not be good enough. The new empowered Planning Commission does have considerable carrots—the states depend on it for central funds. It can wield the stick and stop funds going to states that don’t implement open access. This will need ferocious resolve and persistence. But then great leaders are wilful. They are one-pointed in pursuit of their ‘big hit’. They have an uncanny ability to be one-pointed while seeming to do hundreds of things in the routine of the day.

1 comment:

My Blog said...

They make a mockery of our lives and remind us daily that we are a third world country.