UNDERSTANDING SOCIAL OPPOSITION TO POWER-SECTOR REFORMS IN INDIAN STATES


India has not experienced any notable improvements in the quality and availability of power supply despite the implementation of economic reforms. Public utilities in power sector continue to be the single largest contributor of fiscal deficits in the country. Progress has been very slow in many states in implementing power sector reforms. There is a growing perception that power sector reforms are politically costly due to the opposition from the electorate, and this has motivated this study of social opposition to reforms. This study was carried out by V. Santhakumar, sponsored by the Japanese Outstanding Research Award of the Global Development Network and was housed at the India Development Foundation.

It analyses how households respond to the proposal of privatising their electricity utilities through a primary survey covering 7000 households in 14 states of India. It shows that unconnected households are less likely to oppose privatisation. Among the connected households, those paying higher tariff, encountering longer duration power interruptions, facing problems in work place or in public services due to lack of adequate power supply, perceiving that the provision of electricity subsidy affects the provision of other governmental problems, are all more likely to support privatisation. Those consuming more units of electricity are also more likely to support. Though the households with irrigation connection tend to oppose privatisation, this is not to the degree expected given the very low price that they pay for electricity consumption. Duration of power cut in relatively better quality states does not encourage the households to support privatisation. Those who are paying more currently for power supply, or facing long duration power cut, are more likely to be ready to pay further more to improve the quality of supply. More importantly, those who are willing to pay more are likely to support privatisation.

The study was presented at a seminar held in Hotel Maurya Sheraton in Delhi on March 17, 2006. About 50 participants from academic institutions, policymaking bodies, multilateral agencies, and media have attended this seminar. The seminar started with an introduction of the partners of this research and seminar. These include IDF, Global Development Network and Centre for Development Studies (CDS). Prof. N. R. Madhava Menon, Chairman of the Board of Governors of CDS chaired this opening session. Then the key findings of the study were presented.

This was followed by a discussion session chaired by Dr. Lyn Squire. Prof. Ranganathan raised the issue of whether the so called anti-reform states have in reality only less potential for reforms, given their relatively better quality of electricity supply. Prof. Sebastian Morris found problematic the argument in the paper that the opposition from agricultural households may not be significant. There was an open discussion afterwards. Many participants raised doubts about the appropriateness of the question on privatisation. Santhakumar, in his reply, talked about how the question on privatisation was found to be least complex as far as getting an informed response from the households was concerned. He also mentioned the rationality in using average tariff from the primary survey and also publicly available estimates of costs for the analysis of the paper, rather than the sophisticated estimates of costs and subsidy available with governmental agencies.

There was an afternoon session chaired by Prof. K. Narayanan Nair. Sri. Madhav Godbole doubted whether the response to privatisation was a reflection of the `fear of unknown". Prof. Shubhashis Gangopadhyay highlighted the contribution of the study, as a first time account of the position of households towards power sector reform, given that we have knowledge about the responses of farmers and industry. Dr. Partha Mukhopadhyay talked about the need to have benchmarks of efficiency in analysing the response of households to reforming the utilities. The seminar came to an end by 3.30 pm with a vote of thanks by Dr. Shubhashis Gangopadhyay.