Electricity Reforms in India

The success of electricity reforms in India will depend critically upon the existence of some sort of restraining or disciplining mechanism in the sector, in the absence of which current efforts will likely result in a transition from inefficient public ownership to profit-gouging monopolies or oligarchies. In principle, such a mechanism could be strong, independent and effective regulatory oversight over public or private monopolies or significant competition among a large number of public and private entities. But it is important to examine without bias, and as thoroughly as possible, the feasibility and effectivness of both these sector-disciplining mechanisms before making any claims regarding the desirability of privatisation. The authors also argue that issues related to protecting the environment, extending access to the poor and other off-grid populations and strategic concerns related to import dependence and foreign private ownership need to be addressed upfront in order for the reforms to be in the broader public interest. [This paper is dedicated to the memory of Stephen R Bernow, 1942-2003.]