Gujarat power bill waiver beginning of downward spiral towards bankruptcy; India needs to curb frenzy of freebies

Few were prepared for the BJP-led government in Gujarat to announce that it would waive electricity bills amounting to Rs 650 crore of consumers in rural areas. In doing so, Gujarat effectively turned the clock back by nearly 15 years. All the discipline Narendra Modi had drilled into the power consumption and generation industry in Gujarat as its chief minister has now been sought to be erased.

The move clearly smacked of panic. After the newly-inducted Congress dispensations in Madhya Pradesh and Chhattisgarh announced farm loan waivers, the BJP government did not want its voters in Gujarat to feel that they were being discriminated against. As one of the characters in a play written by TS Eliott put it, "In a world of fugitives, the one taking the opposite direction will appear to run away."

India is rapidly hurtling towards becoming a land of fugitives — running away from reality, scampering away from prudence and being disdainful about the consequences that might befall the country tomorrow. What matters is today and the elections mid 2019. Since appeasement is the flavour of the season, why not announce more freebies? It does not matter if it's the taxpayers who will suffer the burden. The actual tax-paying public is too small to matter when the general elections are around the corner and an atmosphere or reckless wooing prevails.

It must be remembered that power and water reforms were the key changes Modi had brought in when he was Chief Minister of Gujarat. As part of his strategy, he had ensured prompt payment of bills from every farmer for electricity, linking water as well as drip irrigation. It worked. Gujarat managed to boost electricity consumption and generation (see Table 1 below). In terms of growth, the state was even ahead of Maharashtra, which was, till then, the key power producer in the country.


 Gujarat power bill waiver beginning of downward spiral towards bankruptcy; India needs to curb frenzy of freebies

Table 1


But there was another reason for Gujarat to feel proud and be the envy of any power sector analyst (see Table 2). Note how Gujarat ranks head over shoulders compared to every other state in the country. It was not only a high energy consumer, but also a state that was making impressive strides towards power reforms.


Gujarat power Table 2

Table 2


There was one area where Gujarat had slipped. It was lower than Maharashtra on the per capita consumption scale (see Table 3). But that could be because it did not allow any power to be wasted. Each unit had to be paid for. That is why even though Maharashtra was way ahead of Gujarat on the per capita consumption charts, there was reason for Gujarat to look disparagingly at its neighbour. Maharashtra had learnt the unholy art of squandering power, like it had been squandering water.


Gujarat power Table 3

Table 3


Thus Maharashtra had a higher per capita consumption, a lower irrigation record (only 20 percent of Maharashtra's arable lands are cultivated compared to over 60 percent of Gujarat's). Power theft was also rampant in Maharashtra, a phenomenon unheard of in Gujarat.

Not surprisingly, Maharashtra had a higher rate of farmer suicides than Gujarat. Another aspect that isn't surprising is that when one looks at the charts on financial solvency in the power sector, Gujarat does not appear among the indebted states. Compare this with the figures for Maharashtra (see Table 4) and you'll see clear proof that the neighbour was a profligate, while Gujarat had learnt to be responsible.


Gujarat power Table 4

Gujarat power Table 4


Now suddenly, none of the earlier aspirations appear to matter any longer, and that tells you why India has moved from pride and hope to tragedy and gloom.

Remember how while Modi was Chief Minister of Gujarat, not once was there any cry to ban cattle slaughter. This was even though Gujarat was — and continues to be — one of the largest milk-producing states in the country. It is worth remembering that farmers in Gujarat get one of the highest prices for milk. Its cooperatives — managed by the Gujarat Cooperative Milk Marketing Federation — pay around 80 percent of the market price of the milk to farmers. At times, if one takes into account the 5 percent bonus that is also given to farmers, the takeaway by cattle owners is as much as 85 percent.

What this means is that Gujarat had learnt to manage its procurement, processing, marketing and distribution within 15 percent of the market price of milk. Gujarat was the epitome of both frugality and efficiency. Compare this with Maharashtra, where its cooperatives share only 50 percent of the market price of milk with farmers, and you can see that Modi had reinforced the dairy industry, just as he did the business of power generation and distribution.

But something went wrong after the Assembly elections in Uttar Pradesh were declared. Suddenly, Prime Minister Modi, who had been against loan waivers all along, allowed farm loan waivers to be announced. And then, all hell broke loose. State after state began to announce loan waivers. Now, it has come to power bill waivers, as well.

Unfortunately, India's other constitutional arms have not understood the need to stand up as a bulwark against such corrosive forces. As former RBI governor Raghuram Rajan had asserted, the Election Commission should ban the announcement of loan waivers in party manifestos.

But that is just one step. Even the courts have the right to intervene if they believe that the privileges given away to one set of people is likely to disadvantage another set — namely, the taxpayers. But they, too, have watched on, almost helplessly.

Maybe the courts are worried about the charge of judicial overreach. Maybe they believe that the times are volatile, and it's best to stay away from the frenzied fires that are plaguing India. Why risk getting burnt?

But that is precisely why there are the other arms of government — to bring back sanity when others are losing theirs. India's inability to have strong institutions that could check this mad frenzy of freebies is a price that the country will have to bear for many years to come. It took us long to get to where Gujarat was. Now, everyone is content to slip into the dirt and wallow in it.

Did someone say, mera Bharat mahan?

The author is a senior journalist

Updated Date: Dec 20, 2018 07:56:03 IST