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Indira Rajaraman: The power grid knockout

The electricity deficit is the worst of the multiple deficits plaguing the Indian economy today

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Of the plaguing the today, the is the most damaging from the perspectives of both growth and equity. Small manufacturing units cannot afford back-up generators. For plumbers and such itinerant service providers, the mobile phones which are their lifeline need to be charged. For women doing electric-powered job sewing, their children can eat only if they are able to deliver their daily quota. If we did not already know this, it was brought home by the big bang knockouts of the northern and eastern power grids at the close of July.

The immediate cause was the inability of the Regional Load Despatch Centre (RLDC) to control overdrawal of power by states connected to the grid. The was not empowered to operate circuit-breakers, and could only warn erring states. The erring states were too powerful politically for the RLDC to do anything other than sound repeated warnings.

Why should politics have anything whatever to do with something as routine as drawing electricity from a grid? Clearly, if technical systems of this type have not been ring-fenced from political pressures, a regional chieftain could hold the entire country to ransom, pulling down the country if he or she is displeased. Something is seriously wrong with the structuring of the Indian federation.

I have written repeatedly about the desperate need for an inter-state platform where states could meet regularly on their interconnectedness on a number of issues. The Constitution actually provides for such a platform in the form of an (ISC) under Article 263, but the Council came into being only in 1990. The ISC provides in principle a forum where states could meet on issues, and decide in concert on ceding to technical bodies like the RLDC the right to operate traffic signals in a purely rule-bound manner.

This kind of process, whereby members of a group cede to an external authority the right to enforce discipline among the group, in a way that cannot be legally challenged by a displeased member, is very common. In academic departments in American universities for instance, where yearly salary fixation based on productivity involves contentious and unpleasant decisions, it is not uncommon for faculty to agree to an externally appointed Head, who functions in effect as a constitutional dictator.

In practice, the ISC has atrophied through disuse into a somnolent institution tucked away somewhere in the folds of the office complex. The ISC commissions studies of various kinds, but by the time the study reports fall due, the personnel at the ISC have changed several times over. Every once in a while, the ISC acts as the local partner of the Canada-based Forum of Federations, for conferences on what are sometimes quite topical issues. The conference is held, but there is no follow-up.

The power grid knockoutAround 10 years ago when I lobbied strenuously for a revival of the rightful role of the ISC, I got two responses. One was that the National Development Council (NDC) provides the platform I was looking for. The second was that when an issue involving state co-operation comes to the fore, temporary platforms spring up to deal with it.

The NDC is a large unwieldy body that meets sparingly, with a set agenda typically centred around approval of national Five-Year Plans. Meetings of the NDC have ritual value like meetings of the United Nations General Assembly, but lead to no systematic resolution of problems.

Temporary platforms do indeed get formed when there is a pressing issue calling for co-operation and consensus between states. The most recent and successful of these is the Empowered Group of State Finance Ministers, which shepherded the coming on board of all states on the value added tax (VAT), and is presently carrying forward – with many a hiccup – the further move to a dual-track Centre-state goods and services tax (GST). And of course river water disputes are governed under a separate Constitutional provision (Article 262).

Even so, there are many issues that arise from time to time, each one possibly a problem confined to just a few affected states, that do not by themselves justify a separate temporary platform. But these could if ignored snowball into a general sense of isolation and disempowerment, which could severely hamper the co-operation needed for any federation to endure. The number of states affected by any single issue could be small, but the problem itself could be large and of overwhelming importance to them.

My earlier battle for restoration of the ISC as a dispute settlement platform arose out of documented instances of the central government not implementing the recommendations of the 11th and 12th Finance Commissions in full conformity with the intent of those bodies. Aggrieved states had no platform to which they could take their case, from where they could carry a shared grievance to the Centre along with other states similarly affected.

A permanent empowered inter-state body is needed not just to resolve issues of states versus the Centre, but as a solutions exchange where states can be exposed to best practices. Most of all, a politically-neutral platform is needed from which the Centre can shepherd reforms in critical areas which, if left unaddressed, will bring growth to a shuddering halt. Power, land and labour, the three big inputs into the production process, are all on the concurrent list of the Constitution, with shared responsibility between the Centre and states. Transfer of agricultural land is on the state list. States need to reform these markets — a difficult process that will be rendered easier if they do it with a support group of other states facing similar challenges.

Going forward, the India growth story can be revived only on a platform that recognises the mutual dependence between the Centre and states.

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