Incapability of the government to implement policies

The Centre has overriding powers to legislate on concurrent subjects and override almost any state legislation. Electricity is just one example, where both the Centre and the states have concurrent powers but centralising power will not improve effective implementation, writes SL Rao in the Deccan Herald.

The government’s inability to plan and implement any programme efficiently in India is an attribute common to all our administrative services at the Centre and states. Other institutions including independent regulatory commissions, self-regulating bodies like ICAI, educational and health service institutions and judiciary must share the blame.

The constitution has earmarked some activities purely to State governments or concurrently with the Centre. But the Centre has overriding powers to legislate on concurrent subjects and override almost any state legislation. Electricity is just one example, where both the Centre and the states have concurrent powers but centralising power will not improve effective implementation. State governments have politicised power tariffs and energy is priced below costs to farmers and others, in most of the states. Government and industry pay more, diverting resources from other social welfare programmes and infrastructure, while eroding competitiveness of the industry. If the Centre alone had the responsibility for electricity, it would be directly exposed to these pressures as are the states today.

The Centre uses incentives and overcomes legislative impediments to get states to act in socially desirable ways. The Accelerated Power Reform and Development Programme of the Centre provide substantial incentives to states pursuing power reforms. The ‘ultra mega power projects programme’ has enabled the Centre overcome state veto rights on new generation. Coal nationalisation was subverted by sanctioning captive coal mines to large electricity developers who can use surplus coal for merchant power plant operations.

The Central government is ineffective in implementing its own policies. Though electricity generation was opened to private and foreign investments in 1991, only Dhabhol by Enron fructified. It was mired in controversy caused by corruption and gold plating of costs. Transmission was opened to private investment in 1998 but Power Grid Corporation, the central government monopoly in interstate transmission, blocked the private entry for over seven years. The Centre could not give effect to its own legislation. State governments went along with the creation of electricity regulatory commissions, but have interfered in their working by packing them with pliant government officials.

The Electricity Act 2003 was to optimise power utilisation by mandating open access, captive generation, recognising trading, markets and power exchanges. It was to overcome the limitations on the sector’s growth and profitability imposed by the veto power of a state on new generators and their ability to sell to others than the state government distribution monopoly. Open access was the vital means to enable these. The Centre passively allowed the regulatory commissions and state governments to prevent open access. The states want to protect and protract their monopoly over the electricity sold in their boundaries. Some states (for example Karnataka) have used ambiguous provisions in the Act to prevent open access, preventing generating companies from selling electricity to customers in other states.

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Electricity is merely one example of incapability of governments at all levels to implement polices. This occurs in every sphere of government activity. Long delays in planning and implementing infrastructure projects, inadequate thrust on education and its quality at all levels, inadequate health services for the poor, neglect of agriculture, inability to prepare and respond to security threats despite repeated incidents, the instances of poor administration permeate every sphere of government activity.

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Read the full article here.