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.

Monday, September 06, 2004


Times of India, Sept 05, 2004

The 'last mile' is a nice way to think about governance, and I was happy when Finance Minister Chidambaram used this phrase in his budget speech. The last mile is the place where the state meets the citizen, a space that our impudent public servants would prefer to forget. Chidambaram has proposed the sensible idea to maximise returns from existing investments in irrigation by completing the last mile in dozens of incomplete projects across the country.

My engineer father also used to talk about the last mile when I was young. He had in mind feeder canals from Bhakra Dam that he would build to irrigate farmers' fields. It was a simple, logical idea, which his 12-year-old son grasped easily, but no one told the boy that callous, insolent politicians will do everything but the logical.

The Narmada flows serenely across Madhya Pradesh. In the 1970s, the state government began to harness the river. It built a dam near Jabalpur, at Bargi, submerged 162 villages, displaced thousands of people, but forgot to build the canals. So far, it has spent Rs 2,800 crore on this project but realised only 14 per cent of its irrigation potential — just 56,000 hectares have received water instead of the promised 400,000. Lakhs of people in the districts of Jabalpur, Katni, Narsinghpur, Satna are still waiting for water that is so near and yet so far. By spending another 25 per cent this vast area would have been bursting with prosperity and become the granary of central India. Instead, it remains arid and poor.

What went wrong is that succeeding chief ministers diverted Bargi's funds for projects in their own constituencies. The first one started a dam at Bansagar in northeast Madhya Pradesh. Before he could finish it, the second deflected Bargi's and Bansagar's funds to his constituency in Chattisgarh. A third came along and rerouted the funds to his Khandwa district. In the latter, Rs 5,369 crore Indira Sagar project, the dam has again been built, but there is no irrigation in sight. The water table in Khandwa keeps falling and people feel betrayed.

The 12 year old inside me wants to know why they don't build canals at the same time as the dam? It is what they did at Bhakra and at Sardar Sarovar next door in Gujarat. If they had built canals simultaneously in Bargi, Bansagar and Khandwa the face of poor Madhya Pradesh would have been transformed. Droughts would have been averted and peoples' incomes would have doubled to the levels of the Punjab. The tragedy is that they spent 75 per cent of the funds on each project and yet the farmers did not benefit.

The lesson from this story is simple: we, as citizens, must work relentlessly to minimise the power of public servants in a democracy. It is evil behaviour of this sort that resulted in the collapse of communism. It is nastiness of this variety that has driven countries across the globe to privatise their economies. If the Narmada Valley Development Authority of Madhya Pradesh had behaved like a private company, it would have been accountable to shareholders and lenders for results. Nowhere will shareholders tolerate three incomplete projects without returns. I wonder if there is a way to enforce more accountability of irrigation projects by making beneficiaries behave like shareholders. Could we mobilise the Panchayati Raj and the Right of Information Act to this end? Politicians and bureaucrats will naturally oppose this reform as well. But let's always remember that good people, when they become public servants and have to deal with other peoples' money, become bad.