ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Task Force Report on Electricity

While the recent task force report on electricity is comprehensive in its collation of policy issues, it leaves vital matters untouched and treads on areas of authority already clearly defined. The task force was offered an opportunity to deal with issues that require inter-ministerial coordination and action, but in many instances, it appears to have missed these.

Electricity Bill, 2001

The Electricity Bill, 2001 was intended to enable a major restructuring of the electricity system in India. It would have been better if the government had amended the existing three Acts relating to electricity three years ago and introduced essential changes, leaving an omnibus legislation like the present Bill to evolve over time. In the event, the changes have not happened and the Bill too has yet to be passed. The Bill needs to be cleared speedily. This is despite its many shortcomings which can be addressed through later amendments after the Bill is passed.

The Political Economy of Power

India has taken a long time to arrive at a reasonable direction for the improvement of the power sector. For long it has been difficult to strike a proper balance between the commercial viability of the sector and the imperative need to make power available even to those deficient in resources to pay for it. This paper discusses the various issues in the sector and the present state of the reforms programme. It sees some room for hope growing understanding of the sector that seems to have developed among policy-makers.

Rise and Fall of Fast Moving Consumer Goods

The mindset of Indian companies was formed by over 40 years of industrial licensing which limited production capacities. Capacity limitations made premium products the appropriate response. In addition there was the influence of the approach of the multinational companies that value was more important than price and that product features would attract consumers more than low prices. We find it difficult to consciously reduce features, and even value in products, so as to give the mass market consumer what he can afford.

Foreign Investment in Retail Trade

Fear of foreign investment in trade is irrational. It could help to improve productivity and competitiveness. It is unlikely to have adverse effects on employment and might make existing trade more efficient and profitable.

Electricity Bill 2001

The Electricity Bill 2001 is a step forward in removing the anomalies, inconsistencies and even contradictions in and between existing laws pertaining to the power sector. But it fails to impose deterrent punishments for failures on matters ranging from theft and quality to payment of bills by distributing companies. It has provisions which will violate the transparent functioning of regulatory commissions. While the bill will enable the creation of markets, facilitate the process of private investment in transmission, improve grid discipline and ease somewhat the working of the regulatory commissions, success in improving the supply and quality of electricity and the financial performance of the power sector will depend, in the ultimate analysis, on the speed with which the state electricity boards can be made financially viable. On this the bill has no contribution to make.

Dabhol, Godbole Report and the Future

In the present state of the power sector in India, Dabhol power at its present tariffs is likely to be unacceptable to the extent of its capacity. The speediest way out of this imbroglio may well be to treat DPC as a stranded project and negotiate the lowest cost to move the foreign investors out of the project. This may mean that governments might have to take a knock because of stranded costs, to the extent that the price payable might be more than what an Indian investor might be willing to pay. Tariffs can then be based on those lower capital costs and without the dollar denominations

Indian Companies in an Open Economy

The deed is done and the clock cannot be put back. Competition has come into almost all sectors of Indian industry and will increase. It is making the economy more efficient in using resources. A new breed of entrepreneurs and new industries are emerging who are able to operate successfully in this changed environment. This process must accelerate. It is in the interest of the country's growth and competitiveness that the old companies which do not wish to change and reform themselves become extinct.

India's Rapidly Changing Consumer Markets

Indian consumer markets are growing rapidly, are changing in nature and composition and many manufacturers and service providers are adapting themselves to these changes. A look at how markets have changed in a matter of a couple of years, or even less.

Competition, Ethics and Governance

Business in India is entering a new situation. Competition has increased. New entrants from other countries now compete in India with locals. The costs of failure are very high, as are the rewards for success. The pressures to dilute value systems and have more flexible ethical postures are considerable. Both society and institutions in it must develop structures and systems that enable a core of values against which all actions are measured and which provide boundaries for actions.

Electricity Reform and Regulation: Some Issues

Independent regulation is new in India. Public opinion has to recognise its value. It will do so when it sees results in terms of improved quality, availability and, in due course, reduced tariffs. Ultimately the independence of regulators can only be guaranteed by strong public opinion. While legislation will help, it is important that the financial and human resources for regulatory commissions are kept out of the scope of government approval.


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