The tragic death of a BSES engineer in the national capital, when out inspecting complaints of power theft, shows up India’s collective governance failures which hold back development. The engineer, Abhimanyu Singh, and his colleagues were chased by a mob despite police presence. This resulted in a car crash that took his life and left others critically injured. Other than rampant lawlessness and the general surrender of police to mobs, it also shows why India’s power sector needs repeated bailouts. To put electricity theft in perspective, 33% of Indian households in 2011 did not have access to electricity in 2011. If power theft remains unchecked, there won’t be enough resources to electrify every home.
Electricity foregone on account of aggregate technical and commercial losses was about 24.6% in 2014-15. In other words, only three of every four units of electricity generated get paid for by consumers. There is no free lunch for an economy, so tax payers have to make good the electricity pilfered. This has many forms, including bailouts for financial institutions which have lent money to discoms. For sure, there have been improvements in this area and losses are lower than what they were a decade ago. But India’s performance on this front still remains poor.
Unless power consumed is paid for, it will be difficult for discoms to generate resources to upgrade infrastructure. This translates into poor electricity supply and a slow pace of industrialisation. Getting India’s power reforms right is key to making Indian manufacturing competitive. If politicians feel poor consumers cannot pay for electricity, they should be provided for through a transparent government subsidy. Politically sanctioned power theft can cripple Indian industry.
Central governments have met with little success in power reforms as states generally control discoms. However, it is possible for NDA to change this situation. One, some of the states with the largest technical and commercial losses – such as Rajasthan, Madhya Pradesh, UP and Haryana – have BJP governments. If these states get their act together, it will make a meaningful impact at the national level. Two, the last bailout package, Uday, was built around incentivising states to reform their power sector to access central resources. This is a sound approach. Moreover police should not tamely surrender to mobs, as they routinely do these days.