In his first address to the nation after being selected to lead the UPA-I government in May 2004, PM Manmohan Singh had famously stated, “Reforms are needed, I have always said that, but economic reforms with a human face will give India’s common man real hope.” He had gone on to reassure the over one billion listening that economic and social development would be “for all, not just for a few”.
Nine years on, alas, it is not just the poor and forgotten millions in rural India who are waiting for long-promised basic amenities like clean potable water, electricity, public transportation, working sewerage systems, good roads, neighbourhood schools, gas connections and supplies. No, all this sounds like a fantastic dream for most people outside privileged gated communities. Life in the teeming cities, especially in urban slums, poor and middle-class localities, is getting tougher—bordering on the unbearable.
And this is not a Delhi or Mumbai phenomenon alone—the state of affairs in most cities is no less alarming. Over the past year, consumers in cities in Andhra Pradesh, Karnataka, Uttar Pradesh, Maharashtra among other states staged protests against hikes in power tariffs. Supported by political parties, Hyderabad’s consumers recently took to the streets against a fuel surcharge adjustment that has almost doubled the power bill for many. Consumers in West Bengal have been up in arms over insufficient delivery of LPG cylinders. There have been mini riots over the build-up of roadside garbage in Kerala’s cities. And so on.
Little wonder why political parties all over the country—including new entrants like Arvind Kejriwal’s Aam Aadmi Party—are tapping into this negative sentiment. Everyone knows that corruption is a big issue. Exactly how big remains to be seen. Experts are asking whether the general elections, which are due anytime over the next year, will be the common man’s stage to deliver a verdict on reforms? If the results of municipal elections across the nation are any indicator, ruling parties, more often than not, do pay the price for such indifference.
It’s no secret that public utilities in India are seen as a huge business opportunity. Mismanagement, apathy and corruption in the delivery of the public services is used as a justification to introduce private players. Says political analyst K. Nageshwar, a member of the Andhra Pradesh legislative council, “In reality, the privatisation of public services is resulting in availability of quality public utilities for the rich, while depriving large sections of poor and lower middle classes access to such public utilities both in terms of quantity and quality.”
Or simply ask some of the millions in the Capital whose hearts skip a beat every time the electricity bill is delivered. The increase in power tariff since the privatisation of distribution system in 2002 has raised bill amounts, not necessarily the quality of services provided. According to the law, the consumers should have benefited with being able to choose between power distribution companies (discoms). However, no such provision exists in practice. Tellingly, RWAs are asking why discoms are claiming losses when they have been able to save around Rs 4,000 crore in lost revenue by plugging 40 per cent of power thefts from the system.
At the core of the urban mess in India is the fiscal unsustainability of urban local bodies, which, paradoxically, is often at variance with the economic growth and prosperity visible in their catchment areas, a FICCI study in October 2011 states. This is often used to justify privatisation. Sanjay Kaul, a BJP leader and founder president of URJA, cites the case of the Delhi Transport Corporation, “which has been deliberately run to the ground so as to buttress the argument for privatisation”. Kaul points to the irony in the state government’s provision of security to privatised utilities—to prevent power thefts, for instance—when it could have easily used the same security force earlier.
Experts stress that while the mechanism to secure private operators’ profitability is in place, nothing is being done to ensure that the regulatory bodies perform their task. This holds true across the board, be it water, electricity, telecom or transportation. Sure, as Professor Shreekant Gupta of the Delhi School of Economics puts it, some projects are doing better than others. The problem has to do with the regulators. “Partly, it is the lack of technical competence of the retired babus heading the regulatory bodies and partly it is the regulators’ capture by private companies,” says Gupta, an expert in urban and public policy.
Barring a few exceptions, therefore, consumers in most cities are caught between the rapacious private sector and unaccountable government agencies. Subrat Das of the Centre for Budget and Governance Accountability points to a major systemic flaw. Information on spending on drinking water and sanitation in urban India is difficult to segregate, especially by the Centre. “The way administration is divided in urban areas isn’t clear unlike in rural areas,” says Das.
Take the case of Gurgaon, India’s fast growing commercial hub, which is slated to add another 55 sectors in the next 11 years. This city depends on diesel to fuel most of its power supply. Barring the Delhi Metro, there is no public transport. The only option then is private transportation. “Redirecting subsidies to the deserving is understandable. But people do mind the fact that there is just no public transport infrastructure,” says Shashi Sharma, a management consultant and representative of the People’s Action Campaign Forum in Gurgaon.
And privatisation of waste management has had unsavoury outcomes in many cities. Kerala, for example, has thrown up its hands with no land available to dispose of the over 8,300 tonnes of waste generated per day. Protests over the waste dumps of Lalur, which falls under the Thrissur Corporation, are a microcosm of what is happening throughout Kerala. “The government is not serious about managing waste,” says T.K. Vasu, president of the Lalur Malineekara Viruddha Samara Samithy.
It seems that for all the noise, many governments are simply not serious about managing reforms. Their logic isn’t immediately apparent. Wouldn’t it make more sense to ensure votes through better utility services?
By Lola Nayar with Outlook Bureau
Apropos The Take It Too Easy Polity (Mar 4), the problem here is one of capital formation. India does not have a municipal bonds market. Towns and cities are not able to tax their residents or float bonds. Allowing the latter could raise large sums which can then fund expensive infrastructure projects. This is the only way such services can be offered at relatively cheap prices. But politicians won’t let this happen.
Shailesh, Bridgewater, US
It’s interesting that the reporter didn’t cite telecom in her perils-of-privatisation story, how the good old P&T, when replaced by rapacious private telecom companies, leads to things like the 2G scam.
Rajesh C., Phoenix, US
It’s now obvious that the economic reforms from the early ’90s has not achieved its socioeconomic objectives, since the private sector is only after profits. Liberalisation has also failed to fill the vacuum created by the partial withdrawal of public sector investment in India’s backward states.
Beena Mathur, Pune
The issue is really capital formation one. India does not have municipal bond market. The town and cities are not able to tax their residents and float bonds. If they are allowed to do so, they can raise large amount of money from Bond market, which can fund expensive Infrastructral projects. That is the only way such services can be offered at relatively cheap prices. The Politicians did not want to dispose the power, hence instead of taking such an approach, went PPP approach. The private players are not in business of charity. What we need is to allow each Metro and Towns collect their own taxes and use that as cash flow to raise large sums of money from Bond Market. Central and State Govt. should chip in too. After that one can provide metro, roads, pipelines, bus services, electricity, garbage disposal etc... in much more cost effective manner. This is the concept of Swaraj. This is the only solution...
Prices have risen, yes. And maybe some of the blame can be laid at the government's door. But has the author addressed the issues behind the rise in prices? Or is this just a case of a silly graduate in English, putting pen to paper and spewing out bull?
Let's examine the facts:
1) The USD to INR rate on 16th Mar 2004, a date arbitrarily picked) to be around the 10 year mark and for which data is available, was 45.21. Today it is 53.94, a decline in the value of the rupee of around 19%. However, so in USD terms the prices should have gone up by around that much.
However, in these intervening 9 years the inflation in the US was not zero. According to an inflation calculator I found by googling, an item bought for 100 USD in 2004 would cost 121.91 USD today. So in all, we shoud be paying 145 INR for something we purchased for 100 INR in 2004.
2) Now curiously, of the 4 commodities mentioned in the chart, three are energy: Cooking Gas, Petrol and Electricity. Let us look at historical prices for crude oil. In 2004 crude oil was about 38 USD per barrel; today it is 93.94 USD. So energy prices are bound to be higher.
3) Property prices and wages have all increased in India. A propert bought for a nominal one lakh INR in 2004 is priced between 5 and 6 lakhs INR. Why would the prices of some assets increase while others either declined or stayed the same.
I could probably write more but I'll leave it at that.
BTW, Outlook editors, can I have a job as your bullshit filter?
Look at the scenario. The most consumable commodities are refined crude oil, and agriculture. These commodities are produced and used, and cease to exist as what they are consumed as. Refined crude is very expensive. Nations have to find resources to buy crude and/or to refine it. The problem and solution are the same. The problem exists because there is no alternative. If we didn't have the problem, we wouldn't seek a solution. We want to use crude, preferably refined. Ideally, we would want to conserve mineral oil, due to the expense. The CPI(M) also wants us to increase the consumption of mineral oil. Perhaps, the idea had been that the green revolution would make us basically self sufficient, and India would not need food. We could then act accordingly. The social message seems to have been this. It then appears, that other considerations were also perceived.
The Debate btw PRIVATE SECTOR Providing Services Vs Govt Sector providing services is a FALSE DEBATE, and a needless one. Yes, private sector does provide relatively better services than govt (example being Telecom) but that is simply because, the private sector business as employeers are allowed to expect the best from employees (and not pander to them the way Govt companies like Air India and BSNL did).
But let us leave this non debate. As a mixed economy, we must and should have both. The real issue is this - PHYSICAL INFRASTRUCTURE - the Bijli Sadak Pani stuff - are all costly to create. A lot of land needs to be acquired to set a power plant, a lot of machinery and minerals need to be dug to put in place a road and a lot of money needs to be spent to dig pipelines to deliver water. So question is who is ready to pay for all this?
Agreed that 70% of iNdians live on bare minimum wages, still it is not that 30% can be taxed to death to deliver the impossible dream of basic infrastructure for all.
The key thing is - our country should agree that some things must be priced to account for cost of delivery. We can subsidise basics like food, education and health. But electricity, public transport and roads - whether built by public sector or private must be priced to ensure that the investors get their minimum return.Once all legal issues are cleared to obey this principle, we will see more capital to build roads, power plants and deliver sewage disposal facilities. Over periodof time, as more people move out of poverty into middle class, we will have more folks ready to pay for the utilities.
If you think that this is exploitatory capitalism, then the one and only alternative is to emulate North Korea and deny everything for everyone except a select ruling elite.
Urban infrastructure is costly to create and maintain. People will have to pay a fair price for it, else it will not get created. The idea that large swathes of the population can be insulated from the rigours of paying for what they consume is coming apart as visibly as our civic amenities.
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