The Andhra model

Andhra Pradesh Chief Minister Chandrababu Naidu finds himself besieged on his Bill to reform the power sector in his state. He should carry on regardless. The Bill is bound to be unpopular in the short run with entrenched employee interests and opposition MLAs who mirror their interests and go to the extent of demanding that the Essential Services Maintenance Act should not be invoked against employees going on strike against the measure. For that reason Naidu8217;s is an admirably bold move in adverse circumstances, especially with state elections due next year, his somewhat weakened position in the state after losing seats in the parliamentary election and the turning on him of his erstwhile United Front allies.

But if he refuses to buckle under inevitable initial resistance and his measures get off the ground it is entirely possible that good economics may prove also to be good politics. The revived fortunes of even a man like Sukh Ram suggest that people will reward politicians who address their real needs,even those whose record on probity is suspect. Naidu has the advantage of his reformist credentials. If his proposed reform of the state electricity board, encouraging private capital in the generation and transmission of power and of instituting the state electricity regulatory commission to introduce a more rational tariff structure begin to pay off in terms of improved power supply to the people of his state, he can expect the number of those who back his measures to vastly outnumber those who feel threatened by them. This indeed is the essence of the entire reform effort: the resistance of the few whose interests are directly affected will be compensated by the people at large when they begin to benefit from the reforms. And a crucial utility such as power, quite apart from its crucial implications for economic growth and state finances, is a matter of very immediate concern to consumers and reforms here can expect better rewards than in many other areas.

Naidu8217;s Bill is a hopeful move in a sea ofconfusion and indeed in marked contrast to such retrograde measures as the Punjab government8217;s decision to supply free power to farmers. If it does become law, Andhra Pradesh would be among the handful of states to address the needs of their power sector. The lead in this matter has of course been taken in Orissa, albeit under the guidance of the World Bank. There too, as indeed in Haryana, the effort has run into some opposition. But unless state governments determine to ride it out with firm resolve alongside an effort to allay fears, they could find themselves in the same boat as the Maharshtra government which has built itself a sorry track record of going back on much proposed reform. Naidu already has said that his government8217;s Bill will not affect farmers or threaten jobs. That may be all right for starters if this law is to see the light of day, but eventually the farm sector cannot hope to indefinitely remain exempt from reform. The bottom line is that the real impulse for reform in this as in manyother sectors has to come from the states. The central government has done its bit by saying power will not be sold to the state electricity boards which fail to pay up. The Andhra Pradesh Bill could well provide the blueprint for follow-up action by the states.