Following the trend described in my previous column, Narendra Modi continued to under-deliver in international affairs, returning from his heart-to-heart in Wuhan with Xi Jinping with little concrete to offer. The Indian government had contained expectations ahead of the meeting, framing it as a wide ranging philosophical discussion, but the absence of any real progress stood out at the summit’s conclusion. Expecting China to accept India as a permanent member of the UN Security Council would be too much, but Modi’s failure to gain entry even to the Nuclear Suppliers Group suggests he has not adequately used the leverage at his disposal, notably the massive market for Chinese-made products in India. Perhaps he will pull the NSG rabbit out of his hat just before next year’s general election for maximum political impact. Certainly, the impression created by his China trip was of a prime minister seeking to ward off bad news in an election year rather than one advancing the cause of his nation.
Taking all credit
If Modi’s NSG failure is instructive, so is the manner in which his party presents domestic success. The Bharatiya Janata Party proclaimed through front page advertisements in national dailies that April 28, 2018 was momentous, for it was the day India achieved full electrification of its villages. In cornering the glory, the party acted like a batsman who comes to the crease with three required for victory and takes full credit for the win after scoring those final runs. Around 97% of India’s villages fulfilled the definition of being electrified when Modi came to power; he scored just 3% of the runs.
Sharing credit for the process that led to the watershed moment would be anathema for Modi and Amit Shah. They prefer an us-versus-them, take-no-prisoners approach in which the decades of Congress rule are viewed as a long era of darkness and corruption bereft of redeeming qualities. They paint the Indian National Congress as a malevolent entity to be extirpated rather than what it is, a democratic opposition party with a nearly identical economic programme and a significantly different social policy. Modi and Shah claim to bring radical change while pursuing the same incremental reform that characterised the Congress-led United Progressive Alliance rule.
India’s record in most areas of economic development over the four Modi years is very similar to that of the previous 10. Take power generation, which is relevant to the discussion about rural electrification. The government’s figures indicate that the years of UPA II produced an average annual growth rate of 6.06%, and the figure has dropped slightly to 5.68% under the BJP-led National Democratic Alliance rule. The tiny difference between the two is less significant than the fact that India today can produce far more power than it can sell. Growth of demand has lagged the tremendous augmentation of installed capacity. Utilisation of capacity in both private and public sector thermal power plants has plummeted in the last decade, from around 80% to less than 60%. This has contributed substantially to the crisis of bad loans threatening India’s banks.
No easy solution
State Distribution Companies (Discoms), the intermediaries between producers and consumers, are plagued by losses, and don’t have the resources to buy power, leaving citizens, even those who can afford the bill, to cope with power cuts. Successive administrations have tried to solve the Discom problem. The NDA under Atal Behari Vajpayee introduced the Accelerated Power Development Programme in 2001, and modified it the following year. UPA I further altered that plan before coming up with a new one in 2012 called the Financial Restructuring Plan. The idea was to have state governments absorb half the liabilities of the Discoms, giving them breathing room to cut transmission losses, theft and under-recoveries. Under Modi, the Power Minister Piyush Goyal introduced the Ujjwal Discom Assurance Yojana or UDAY scheme, which had state governments take over 75% of the Discoms’ debt while banks restructured the rest.
The success of all these schemes, which were animated by similar ideas, depended on electricity providers being able to clean up their act in the face of populist pressure. The news with respect to UDAY’s success is mixed. Only seven of the 31 states and union territories that signed on to the plan reported meeting their 2017 targets to pare losses. Meanwhile, shifting the debt burden is merely kicking the can down the road, as states will be forced to cut investment to pay interest on debt they have inherited from the Discoms. It is a mess with no easy solution, as Arun Jaitley admitted in a rare moment of public introspection at a 2017 meeting of the BRICS Economic Forum.
None of this means India is going backwards. Each year, more people get access to power and more people can afford to pay for it. The slow pace of change is what can seem depressing. A village is considered electrified if at least 10% of the households within it have access to power. That’s a very low threshold, and crossing it can only be cause for muted celebration. What India really looks forward to is a time when every citizen will not only have access to power, but actually use it to light rooms, cool homes, play television, and charge mobile phones and computers. That is no pipe dream, but a privilege residents of dozens of countries enjoy today. We began 70 years ago by crawling towards that target, and 25 years ago began to walk. Narendra Modi was elected on the promise of getting India sprinting, but all he’s doing is screen the movie in fast motion.
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