Power of the lady

Sanctions or no sanctions, Jayalalitha is bent on making life difficult for the Vajpayee government. Or so it would seem from her latest obj...

Sanctions or no sanctions, Jayalalitha is bent on making life difficult for the Vajpayee government. Or so it would seem from her latest objections to the Power Regulatory Commissions ordinance. But pause a moment. This time the BJP’s major ally is not claiming its bete noir, the DMK, is behind the mischief or demanding its provisions be scrapped. Jayalalitha is asking for time to consider the pros and cons before a Bill is introduced in Parliament. That sounds reasonable since the subject was discussed only sketchily at the coordination meeting with allies on May 9. However, when it comes to the AIADMK boss, the text must be read with the subtext before any firm conclusions can be drawn about her real intentions. On the face of it, the problem arises over slapping farmers with charges amounting to 50 percent of the real price when those farmers have got used to thinking power comes cheap. The new regulations require states which have bankrupted their electricity boards by providing free or heavily subsidisedpower to farmers and other consumers to move into the real world.

Orissa saw the wisdom of charging commercial rates some time ago. Andhra Pradesh has been trying but not found it easy. Other governments like Punjab’s remain reluctant to face the wrath of powerful rural constituencies. Populism dies hard. The arguments for and against raising power tariffs have gone on for years. So, the Union Power Ministry’s idea seems to be to end the dithering once and for all with Central legislation. Bringing power tariffs closer to real costs would make SEBs more financially viable and thus clear away one of the major obstacles to the urgently needed private investment in the power sector. To yield to Jayalalitha’s demand and start a discussion within the ruling coalition at this late stage could be to open a Pandora’s box of partisan bargaining and resistance to change.

The prospect of US sanctions slowing down investment in the power sector gives the Centre a strong argument to use against opponents of reform. Itshould certainly use that argument forcefully to overcome politically-motivated, self-centred, short-sighted opposition to this Bill or, for that matter, other measures. But there is an important difference between waving sanctions over everyone’s heads in order to get compliance and careful political management of domestic disputes. Ignoring differing viewpoints in the effort to beat sanctions will postpone trouble not eliminate it. It was pointed out by an official spokesman, in response to Jayalalitha’s objections, that the Bill allows state governments flexibility on tariffs as long as SEBs are compensated by the state exchequer. This ad hoc remedy sounds like a return to the unsound practice prevailing at present. Clearly, discussion is necessary and the best place for it is Parliament. The government should introduce its Bill and invite a healthy debate in the course of which the wheat will be separated from the chaff. There is no better way to expose selfish interests and defeat them. And achieving apolitical consensus in the House is the effective way to counter sanctions and go forward with economic reform.