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subsidy: View: Ringfence reforms to shield them from freebie culture

Prime Minister Narendra Modi’s remarks in a recent speech at an event in Bundelkhand echoed across the border. Speaking on the political culture of dishing out freebies, Modi’s reference to “free revdi” seems to have rubbed his political rivals the wrong way while putting the culture of entitlement underlying freebie politics to mainstream debate.

India has not had an honest debate on this culture of entitlement and its many political manifestations in government schemes and policies. A sterling example of this lack of honesty is Delhi. For nearly two years now, Delhi, governed by Arvind Kejriwal-led Aam Admi Party, has been the beneficiary of free electricity for bills below a certain threshold. Delhi is not only home to the political and bureaucratic elite but also a wide spectrum of media activists, non-governmental organizations and is the hub of activism of all kinds, including of the green hue. It is striking that despite being the nerve center of such activism, there has not even been a murmur in Delhi against this scheme of free electricity while the residents are lectured endlessly on pollution and climate change come November-December every year.

It is this lack of honesty that has encouraged irresponsible politics of free electricity to be exported to other states. Little wonder thus that Kejriwal, during a recent visit to Gujarat, promised to bring his policy of free electricity to the state ahead of state assembly elections due later this year.

One wonders if Kejriwal was ignorant of the history of subsidized electricity in Gujarat and subsequent reforms or if he was trying to turn the power reforms clock back in Gujarat?

Gujarat, before the advent of Modi as chief minister in 2001, was the victim of the worst kind of freebie politics over electricity supply. Flawed policies of the 1980s that saw rampant misuse of subsidized electricity in the state contributed immensely to environmental damage, depleting ground water while doing little to ensure stable power supply. Worse was the fiscal damage from unpaid electricity dues.

It was on the back of this sordid state of affairs that Modi introduced one of the most bold and progressive reforms in the power sector through Jyotigram scheme. The success story of Jyotigram is well documented in the recently launched book Modi@20 – Dreams meet Delivery.

Writing on Jyotigram, noted economist Ashok Gulati explains how the power sector reforms contributed to improved groundwater table, stable power supply and sustainable finances of the power sector.

It was thus galling to see this attempt to turn the clock back on power sector reforms in Gujarat with this irresponsible promise of free electricity.

It is strange that the most vocal of environmental activists fall completely silent on irresponsible politics of subsidies and freebies that are likely to cause damage both to the environment and to finances.

Raising the issue of power reforms, the Prime Minister recently highlighted the huge pendency of dues to central power generation companies and to the power distribution companies from various state governments. Little wonder that the states such as Maharashtra, Tamil Nadu and Telangana, among others, with highest pendency have seen unsustainable subsidy politics. Punjab and Rajasthan also had the highest balance subsidy receivable by discoms, running into tens of thousands of crores of rupees.

The politics of “free revdi” is also lazy politics for it takes the political shortcut of seeking entitlement rather than doing the hard work of accumulating political capital to pursue difficult-to-implement reforms.

Giving a free pass to such freebie politics is not merely intellectual dishonesty but is also myopic for invariably in the wake of irresponsible schemes emanating from the politics of “free revdi” are permanent costs to the environment.

One hopes that Gujarat roundly rejects any attempt to turn the clock back on reforms by seeking to import flawed and irresponsible schemes which are also contributing adversely to climate change.


The contributor is Former CEO, Prasar Bharati

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