November 7, 2016

AAP will create power-free Delhi, not free power

(Piyush Goyal is a member of Parliament, Rajya Sabha and national treasurer of Bharatiya Janata Party)

Gujarat under Narendra Modi has focused on good governance in the power sector and implemented long-term reforms as opposed to the short-term and anarchic methods adopted by Sheila Dikshit and Arvind Kejriwal in Delhi. The result is round-the-clock affordable power supply in Gujarat. In Delhi, AAP has reduced power tariff in Delhi through subsidy in the short-term but the policy will lead to severe power cuts in the future. The Kejriwal model of governance will take Delhites from a free power dream a power-free one.

Sustained reform is better cost-controller than temporary subsidies


Considering basic power tariff on the lowest power slab (on which AAP and Congress gave 50% subsidy in Delhi), Gujarat has seen only 2% cost increase for the general population (? 2.7 to ? 2.75 / unit as per GERC) and a substantial decrease for the subsidy-deserving BPL group with a tariff of Rs. 1.5/ unit) between 2001-13.On the other hand Delhi has seen a 30% tariff increase even after the subsidy in the same period (? 1.5 to Rs. 1.9 / unit as per DERC) (Duties and taxes plus additional costs for fuel cost variation are on top of this tariff for both states).

Reforms ensure that everybody benefits and the state generates financial resources to provide for the really deserving. Additionally, BPL families in Gujarat get power at 30% cheaper rate than in Delhi, which is also a much better way to provide targeted subsidy.

Gujarat’s commitment for 24X7 power: Computing the cost of power cuts

All the above benefits have come while Gujarat went from a power-deficit state (-11% deficit in 2001 to 6.1% surplus power in 2013) in the face of booming demand (33,980 MW increase in power supply vs only 20,723 MW in Delhi). It was all the more commendable as it did so while controlling power tariffs while simultaneously the Gujarat Electricity Board went from making a loss of ? 2,135 Cr. in 2001-02 to a profit of ? 642 Cr. in 2011-12.

It is important to take into account the total power cost borne by consumers after taking into account what they spend on inverters and gensets. Lack of long-term vision in Delhi portents threats of an 8-10 hour daily power cut. Consequently these power cuts increase the real cost of power by 50-75%.

Agricultural, commercial and industrial tariffs in Gujarat are almost two-third lower than Delhi (? 4.4vs ? 7.3 / unit for commercial and industrial consumers and ? 1.7 vs ? 2.75 / unit for agricultural sectors). High tariffs increase the cost of doing business and result in industry shifting out of Delhi and consequent loss of jobs. Additionally, the commercial and industrial units operating in Delhi ultimately pass on the higher cost of doing business to the consumer which results in higher inflation.

Gujarat Reforms: Highlighting role of political will for good governance


Narendra Modi drove Gujarat power sector reforms on the twin pillars of Jyotigram Yojana (twin feeder system for agri, domestic and other uses) and control on power losses. Power theft was brought down by pursuing more than one lakh cases of theft. This needed hard political commitment to reform; defaulters were prosecuted irrespective of political affiliation.

Contrast this to Arvind Kejriwal’s call to stop paying power bills and the withdrawal of power theft cases and the difference between good governance and anarchy becomes very clear.

In summary, Gujarat fulfilled the growth aspirations of its people by providing 24-hour power supply while controlling power tariffs. This happened only because of the commitment to long-term reforms and willingness to spend political capital on the same. On the other hand, Congress and AAP’s short-term and anarchic methods are resulting in widespread power cuts and spiralling power tariffs. The choice for India is very clear between short-term dole and sustainable development.

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