This article reviews the market-oriented power sector reforms
initiated in India in the early 1990s. It brings out a public
interest oriented critique of the three phases of the reforms—firstly,
privatisation of generation, secondly, state sector restructuring
and finally, the ongoing reforms since the passage of the
Electricity Act 2003. Reforms were taken up as a response
to the crisis in the sector. The article questions the success
of the process in solving the crisis. While acknowledging
positive elements like increase in transparency and participation,
it criticises the process for neglect of development issues
like rural electrification and energy efficiency. The article
concludes with some thoughts on developing an alternate
reform approach.
The Indian power sector has been in a state of flux from
the 1990s. There have been major changes in policy, ownership
and structure. Many State Electricity Boards (SEBs) have
undertaken reform programmes with external funding. Private
players have entered the generation and distribution fields.
Regulatory Commissions (RCs) have been set up at the Centre
and in many states. The comprehensive Electricity Act 2003
overrides all the existing legislation governing the sector
and is expected to facilitate competition. This flux in
the power sector has coincided with the policy of liberalisation,
privatisation and globalisation followed by the Central
Government. It is no surprise that similar flux is also
seen in other sectors such as telecommunications, finance,
insurance, transport, health and education. The impact of
this reform process on the power sector has been different,
primarily because of some special characteristics of electricity
and the fact that power is a concurrent subject with the
states having a key role to play.
At the core of this flux is a policy shift that sees electricity
as a tradable commodity, unlike its traditional role as
a development input. Private participation, the increased
role of market forces and the reduced role of the state
are the key elements of this policy shift. Considerations
like the power sector acting as a state instrument of public
policy, and emphasis on self-reliance (in fuel, technology)
have become less important. Subsidies for poor consumers
(as cross subsidy from rich consumers and directly through
the state budget) are being questioned. As a part of the
structural change, many new players have come up in place
of the vertically integrated electricity boards, which had
a monopoly in the power sector. In place of the direct regulation
of the sector by the government, `arm's length' regulation
by an independent RC has been introduced.
|
