gfiles magazine

August 14, 2012

The ‘Dark Age’ is looming

reforms m g devasahayam
The ‘Dark Age’ is looming
The Government’s dealing with power sector is more like five blind men
trying to figure out different parts of an elephant
INDIA needs a second wave of reforms, says President Barack Obama. It will, of course, be driven by the US Agency for International Development (USAID) and MNCs like Wal-Mart. Like it was in the mid/late nineties when these entities, led by Enron, the energy MNC, anchored the ‘first wave of reforms’!
We are still paying the price of the ‘first wave’ at the core of which was the power sector. And today India is ‘powerless’, with the media predicting the ‘the coming of the dark ages’. The Indian power sector is in deep distress and angry citizens are taking to the streets in protest against the abysmal situation.
Power shortages through June and July averaged over 36,000 MW, roughly 18 per cent of India’s installed generating capacity of 2,02,980 MW. Outages routinely cause 12-16-hour blackouts in cities. Losses in distribution average over 30 per cent across the country. Power utilities are running an overall annual loss of about Rs 70,000 crore. Over 25 per cent of India’s population still has no access to electricity.
To find out why this has happened, we need to go back two decades. In the early nineties, when India’s power sector reforms were being deliberated at the World Bank, there were two schools of thought. The issue was whether the reforms should be ‘structural’ or ‘end-use efficiency’ oriented. Those who knew the Indian realities suggested that end-use efficiency, supported by structural reforms, should lead the process. But the consultants and ‘reform specialists’ pitched in for the structural approach, with end-use efficiency as an embellishment.........READMORE

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