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So Near Yet So Far! A Classic Indian Syndrome

Amrit Pradhan talks about Electricity Act 2003.

Studying in a National Law University(NLU) , one of the centres of importance for Development of Law in the country with a posh campus, library and yes the most important feature, a blazing Wi-Fi connection. These are the three most important things in our University milieu. Basic utilities like 24/7 electricity, water, 7-days a week newspaper at-your-doorstep service, very reasonable mess service (overly understated considering what we pay for it. Rs 90 on average for a 4-square meal including snacks) and the evergreen support system and knowledge injectors, our Teachers.’ 24/7 electricity supply (with generator backup) means electricity is wasted by majority of the students (I include myself in that bracket.). Being only one-of-the NLU’s (out-out-of 16.) to have 12 hour AC supply is another major consumer durable which is included in the former bracket. However, my gut feeling predicts the situation won’t last for long.

And we students would curse ourselves“again” for not paying obedience to polite requests of the previous generation to try and conserve energy. I guess this is the counter our millennial generation to get one back against the older ones’ who even after so much International and Domestic hand-wringing haven’t been able to save the earth for their future generations.

All the three political organisations in the run-up to 2017 Punjab Polls have declared free-electricity for the poor (including the incumbent Shiromani Akali Dal Govt. coalition with BJP). The trade-off between votes and supplying electricity in the majorly rural area populated Punjab has to borne-off by the middle-class consumers. The slog of middle-class from days after 1989 continues.

In India, supply of Electricity is regulated by the Electricity Act, 2003. A separate Rural Electrification Policy, 2006(REC, 2006.) was introduced by the then UPA-I Govt. to ski through electricity to Rural India. According to Census 2011-12, 83.3 crore or close to 70% of the population are of rural domicile. According to the Policy, a village is classified as electrified if the basic infrastructure (distribution transformer and power lines.) is in place.

So the final goal of the REC, 2006 a centrally-sponsored scheme (CSS is a scheme largely funded by the central government with a defined State Govt. share contribution to the scheme) is putting up infrastructure for power supply. No Central Govt or State Govt. policy mentions the quality of power supply or assurance of the same is mentioned. Power supply ultimately falls on the shoulders of State Governments (the recent Volleyball game played by the Centre and UP was a classic totem) but there is also a lack of a solid Central scheme (something NITI Aayog should look at).

This is a good case of Goodhart’s Law, which says that once a measure becomes a target, it ceases to be a good measure, partly because so many people have an incentive to doctor it. Recent reports on the the very crucial Electricity Generation, Transmission and Distribution sector (a major indicator in World Bank Ease of Doing Business Index) has shown the general benchmark for rural areas for discoms lower than that of highly populated and profitable urban areas.

To check the anomaly, Section 23 of the Electricity Act,  2003 provides authority to State Electricity Regulatory Commissions (SERC) to order to have “power supply in rural and urban areas to have the same quality”. This a legal remedy, however a much simpler remedy would be to make power supply in rural areas more viable. Be it by applying renewable energy solutions or including supplying of Electricity to rural areas as an activity under the CSR activities, made mandatory for the registered firms (which have turnover over a certain limit.) by the Companies Act, 2013 (Section 135.).

A major business development happened in terms of formation of Resurgent Power Ventures Pvt. Ltd.. Indian Pvt. Bank major ICICI Bank, Bahrain Branch formed this JV with other partners in Tata Power, CDPQ(2nd largest pension fund in Canada.), Kuwait Investment Authority(KIA) and Sultanate of Oman State General Reserve Fund (SGRF) to explore and acquire assets in hydroelectric and transmission sectors. The venture based in Singapore would look to develop the sector with their worldwide knowledge and expertise.

India is the 5th largest electricity producer in the world and still is not able to provide it to majority of its population who reside in the rural areas in a consistent basis. The opening up of private sector in the industry was way back in 1991 but it wasn’t enough to sow seeds for enough of private sector meddling due to government labyrinth working style. But the M&A’s in the sector has grown since the commencement of NDA 2014 Govt.

Time to check the reality and quality even after having gaining 92% electricity coverage in villages out of the 10,072 homes electrified (electricity supplied at least once.) since the reign of the Energy-filled NDA Government. (as proclaimed by Union Minister of Power, Piyush Goyal.).There is too much noise, but too little to show for, on rural electrification point as shown by the recent stingy example in Uttar Pradesh.

Quality not quantity matters at the end of the day, be it on the segmental part of the balance sheet(where assets and liabilities of a Company is presented.) or on the front of consistently supplying electricity, a basic necessity of We the people.

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