The overall investment scenario can be improved only when gala investment meets are complemented with an on-ground systematic and consistent focus on quality

These days investment meets are in vogue. Every state seems to be having a gala investment meet of its own. One can see large advertisements in newspapers and television regarding some state or the other having investment meets almost every month. Recently, Odisha had a very successful investment meet in which it is claimed that intentions to invest more than Rs 10 lakh crores, generating employment of almost similar amount, have been received. I think it all started with the highly successful model created by Gujarat through its very well-organized vibrant Gujarat investment meets. The Uttar Pradesh government over the last several years has also been holding its investment meets and the succession of conferences is to culminate in a final big bash global investment summit scheduled for February. To make this summit a success the Chief Minister, Senior Ministers and senior officers of the UP government are visiting several countries to showcase the investment potential of Uttar Pradesh and solicit investment proposals.

A huge target of Rs 10.5 lakh crores has been kept for this summit. Almost five years ago, the UP government had signed MOUs worth Rs 4.26 lakh crores of investment but less than 50 per cent of this has materialized on the ground. It is nice to have high targets as they have the potential of motivating the officers to work towards a goal. However, targets also have a negative side. My experience in government has been that whatever targets are set, get achieved at least on paper. The reality often is very different and can be misleading. The achievement of the targets under various development programmes is an illustration of this malaise. I would rather go for realistic targets and also focus on the quality of investments that come to the states.

I am not against investment meets. I feel this serves a very useful purpose in having a direct dialogue between the government and members of the industry in which the concerns of business are addressed and a suitable investment climate is created to incentivize actual investments. As Chief Secretary of UP, after formulating a very progressive industrial policy along with sector-specific policies, we went for investment meets in Mumbai and Delhi which were highly successful and many of those who attended said that but for this exchange of views, they would not have been aware of many initiatives taken by the State Government. However, I found that getting MOUs signed was one thing and executing them was a different ball game altogether. In the summits, the focus is on presenting the enabling policy framework, the existence of land banks, a facilitating security environment and other strengths of the State like the availability of raw materials, the status of infrastructure and the availability of human capital. Those who had a good experience investing in a state share their views and this is one of the most important factors in promoting investment in the state. However, I found that translating these MOUs into actual investment required a lot of effort in coordinating the views of various departments and also in trying to negotiate the long list of exemptions and benefits that the proposed investor was demanding.

In UP, our industrial policy had a very forward-looking clause which stated that any investment above Rs 500 crores would be treated as a mega project and the terms and conditions would be finalized after mutual consultation across the table. This proved to be a thorny issue as the investor would ask for the moon and the government finance department and rules and procedures would not allow things to be so open-ended. The only point I want to make is that converting these MOUs into actual investment requires a very proactive and liberal decision-making framework which is often not the strength of the civil service which tends to cover its tracks and secure itself against any future allegations or inquiries.

Similar is the reality of ease of doing business (EODB) or single window. Despite instructions from the top and an effort to get all clearances from one nodal point in reality departmentalism often comes to the fore to make a genuine single window difficult to achieve. In the case of EODB, where all possible instructions have been issued to see that clearances are given without the entrepreneur having to run from one office to another, the actual reality at the cutting edge of administration is often very different. Any prospective investor can be asked what he has to go through on getting clearances from the pollution control department or power connections. I would say that more than any policy, it is the mindset of the officers dealing with investors that creates the culture of investment in the state. This possibly explains that despite a high ranking in EODB the amount of investment coming into the state of UP is not a matching amount. UP, unfortunately, has a semi-feudal structure of administration which is often not very welcoming to the entrepreneur.

It is also a fact that currently all over the world there is inflation and also fears of recession being around the corner. In such an environment, investors may be wary of investing their funds. This may not be the best time to solicit investments. Further, I have a feeling that the same prospective investors are signing MOUs with various states and will finally invest in the state where they get the best deal which is another reason why the quantum of MOUs is not a very accurate indicator of the actual investments that is likely to flow into the state. Moreover, one thing that many states ignore is that the experience of the existing industries with the government is a very important determinant of the investment climate in the State. Very often, the existing industry has a long list of grievances with the state government which, if they are not getting resolved then they do not speak well about the investment scenario in the state. I feel, the focus along with the investment meets to attract new investment there should also be a focus on having dialogues regularly with existing industries and a very proactive and positive approach in resolving their problems. If the existing industries are happy then they will act as brand ambassadors of the states.

It is also important to focus on the quality of the investment that is likely to come. Along with the target of investments, there should be a specific target for employment also, especially in light of the recent experience of growth without employment. In UP, it is important to see that the proposed investment is not concentrated in Noida or West UP but dispersed throughout the state to correct the regional imbalance of growth. I also feel that along with investments in manufacturing there should be a policy framework to incentivize investment in the services sector which has a huge potential for growth in the coming years.

Investment meets, by themselves, are not sufficient to bring investment to a state or create an environment of high growth rate. Focus has to move from organizing gala events attended by celebrities to meticulous and systematic focused hard work at the ground level to genuinely give a welcoming signal to the prospective investors. Merely focusing on a large target of investments can often give a very incorrect picture.

The writer is an ex-Chief Secretary, Govt of Uttar Pradesh. Views expressed are personal

Revamping the process of selection of CECs and ECs and formulating a law for the same would further strengthen the sanctity of the Election Commission

Former CEC, TN Seshan, stamped his authority on the entire election process

A constitution bench of the Supreme Court is hearing a bunch of pleas on the issue of the process involved in the appointment of CEC (Chief Election Commissioner) and EC (Election Commissioner). Articles 324 to 329 of the Constitution deal with the election commission and Article 324(2) of the Constitution states that the election commission shall consist of the Chief Election Commissioner and several other election commissioners, as the President may from time to time fix and the appointment of the Chief Election Commissioner and other election commissioners shall, subject to the provision of any law made in that behalf by Parliament, be made by the President. The Supreme Court has questioned the process of an appointment of CEC and EC and also queried why a law in this connection has not been framed despite being provided for in the Constitution. During the pendency of the matter before the Supreme Court, Arun Goel has been appointed as the second election commissioner. It may be noted that the Government now has made a provision to have a CEC as well as two ECs. The capability and competence of Goel is not under question. Even the Supreme Court has observed that Arun Goel has an exemplary record as an officer and has been a gold medalist during his academic days. The court is raising the issue that on what basis a panel of four eligible candidates has been prepared by the law ministry and how one out of this four has been selected so promptly. The haste in the appointment has got the Supreme Court Concerned particularly as the post was lying vacant since May.

It is clear that ever since the Election Commission came into existence, no political party has taken the step to formulate a law regarding the appointment of the post of CEC and EC. The appointment to the post is done by the President of India based on the advice given by the council of ministers. It is not as if the current government is responsible for this but also all the governments that have been in power since the very beginning. So far the appointments have been made from retired civil servants and in particular from the IAS. We have to try and assess whether the Election Commission has performed its role as desired by the Constitution of strengthening democracy despite the CEC and EC being appointed by the executive. There is no doubt that right from the first CEC, Sukumar Sen, who conducted the first election in 1952 very efficiently, there have been election commissioners who have conducted elections in this vast and complex country with a lot of fairness and impartiality. In particular, TN Seshan is taken as a person, who by the virtue of his personality used the powers given to him under the people representation act and stamped his authority on the entire election process and has made it fair and transparent and no political party can today claim that it can influence the process of elections. Seshan was a trailblazer and even the Supreme Court has acknowledged his contribution.

I recall that I was posted as District Magistrate when Seshan was CEC. As DM Banda, I conducted the elections to the parliament and assembly in 1991 and again in 1994 conducted the election to the UP assembly as DM Allahabad. Seshan had a very aggressive personality and never minced his words. I remember that all political parties were in awe of him and all the officers used to quake in his presence. I recollect that he had come to Lucknow to review the election preparations and took a meeting with the Chief Secretary and other senior officers and was unhappy with the quality of the agenda note prepared. He threw the agenda note and angrily stormed out of the meeting with the Chief Secretary and other officers running after him to apologise and placate him. In another meeting, which I attended as DM in the Election Commission, he came out strongly about the measures he had taken to reform the election process and then asked if any one of us wanted to raise any issue. Such was his terror that not a single person spoke a word. Seshan said that he would hold the officer personally responsible for any non-implementation and even when to the extent to say that he would not spare any Chief Minister or political person if they interfered with the process in any way. The elections before Seshan and after him were two different things. Before Seshan, I remember political people would approach the District election officer with some request and also move around in convoys in their constituencies. The entire city used to be plastered with election material. After Seshan, all this became a thing of the past. As District Magistrate I found that there was no interference from any political party and we conducted elections smoothly and effectively. Seshan utilised the power available to him in the election laws and implemented them with the sheer force of his personality. Since Seshan, all those reforms have been further strengthened and the election process is conducted without any fear by the officers concerned. The point to note is that Seshan was an executive appointment and so also have been so many other luminaries appointed to the post of CEC/EC. The question then arises whether the current process of appointment by the executive has in any way affected the fairness and competence in conducting the elections by the commission.

Another issue raised is why only retired civil servants and primarily those belonging to IAS are appointed to these constitutional posts. I feel that one reason is that IAS officers have worked as District Magistrates and have conducted elections and are therefore well aware of the election process. During their career, they are posted as election observers several times and so are well versed with the superintendence and conduct of elections. The entire election process is conducted by District Magistrate and his team and the IAS officers are very well acquainted with this entire structure of district governance and so I feel are better suited for this post. There could be conflicting views on this but I feel the current process has merits.

The issue of the tenure of CEC has also been raised by the Supreme Court. Six-year tenure has been prescribed but no CEC in the recent past has come anywhere near doing six years as CEC. An officer is appointed to the commission as EC at the time of his retirement and he can continue till the age of 65. The senior most amongst the ECs become the CEC and normally gets a two to a three-year term. I see no reason why there should be any quarrel with this as a person appointed to the commission gets a five-year term as EC/CEC. If six-year tenure is to be given then the retirement age of CEC and EC could be extended to 66 years. In any case, I do not see how this impacts the competence and fairness of the commission.

The Supreme Court has suggested that there could be a broad-based selection committee consisting of the Prime Minister, the leader of the opposition and the CJI. I agree that such a committee can give a better signal about the fairness of the selection process. However, at present, the appointment to the post of CBI Director is being done by such a committee and it would be worthwhile evaluating whether the process of selection of CBI Director is being perceived as being fair and above board. I think even in such a committee the voice of the executive would generally influence the process of selection.

However, it must be noted that over the last few years there is a growing perception that the election commission is influenced by the political party in power. This may or may not be true but in the recent past, it cannot be denied that questions have been raised about the working of the commission. The Election Commission is the bedrock of our democratic structure and should be above board in reality as well as perception. Keeping this in mind, I feel that there is no harm if the parliament debates the process of selection of CEC and EC and frames a law in this regard. This would help in further strengthening the sanctity of the institution which is essential for our democracy. Not only must the Election Commission be fair but it should appear to be so also.

The writer is an ex-Chief Secretary, Govt of Uttar Pradesh. Views expressed are personal

The red flags raised by the GHI report regarding malnutrition in India are indeed concerning, and deserve acknowledgement rather than denial

The latest global hunger index report has been released, and India has been ranked 107th out of 121 countries. This has once again stirred a controversy, with the Indian government protesting and responding by summarily rejecting the report and claiming that this is a part of a consistent effort to taint India’s image. The global hunger index gives the impression that it is about shortage of food and a large number of people going hungry. This is definitely not the state of affairs in India where we have achieved food security, and there is no one who is remaining hungry for want of food. However, the GHI is a multidimensional index of hunger, which makes it much more complex. Its four measures are child mortality under five years, child wasting, child stunting and under nourishment. These measures have been used ever since the inception of this index in 2006. It is not as if some new measures have been used to obtain the current ranking.

The Indian side argues that this analysis is based on inadequate data. Proper data regarding these measures is often not properly computed or presented by various states of the country and, as such, the GHI relies upon some kind of an approximation or projection of incomplete data. It has also been argued that in order to calculate the index, the GHI has been selective and discretionary in terms of using the data. Essentially, the issue is about unreliable data being used. In a similar vein, India reacted to its low score in the human development index (HDI) as well. It alleged that data regarding the deaths during the pandemic, where excess death figures were used to calculate life expectancy, were incorrect. However, GHI or HDI are not India-specific surveys. The GHI website has clearly stated that its findings are based on data officially reported by the member countries, including India.

The GHI report should come as a shock to us when we realise the extent of malnourishment prevailing among children in our country. Reacting to similar findings in 2012, the then Prime Minister Manmohan Singh had acknowledged that such a high level of malnutrition was a matter of national shame. The GHI index considers child mortality as the percentage of children who die before reaching the age of five, due to inadequate nutrition or disease. Data show that India has 3.3 per cent under-five mortality rate, which is higher than Bangladesh at 2.9 per cent, Indonesia at 2.3 per cent and China at 0.7 per cent. Of course, we are better than Pakistan which is at 6.5 per cent.

The second indicator considered by the GHI is the proportion of people who are undernourished in the population. India fares quite poorly at 16.3 per cent, which is much higher than Bangladesh at 11.4 whereas China is less than 2.5 per cent. Similarly, India performs badly along the indicators of stunting and wasting of children of less than five years age. As many as 35.5 per cent of children in India are suffering from stunting (children under five who have low height for their age, resulting from undernourishment), which is extremely high. This indicator accounts for 1/6th of the GHI score. Similarly, 19.3 per cent of under-five Indian children suffer from wasting, which is much higher than the figure of 9.8 per cent for Bangladesh and 1.9 per cent for China. Even Pakistan scores better at 6.5 per cent. The weightage assigned to wasting is 1/6th of GHI score. The overall score is 100, and the lower a country scores the better its performance.

The Government of India has rightly pointed out that three out of these four variables relate to children and, hence, cannot be taken as an indicator of the entire population. There is merit in this argument but it is also true that India is facing a crisis of undernourishment, particularly among children, which is indeed a matter of great concern for policymakers. The government has started a Poshan (nourishment) Abhiyan but a lot of work still needs to be done. States like Uttar Pradesh and Bihar are particularly vulnerable. We have to take urgent steps to eradicate malnutrition among children, which would need maintaining real-time data of the weight and height of children and targeting government schemes to take them out of this sorry state of affairs. Rather than spending time on finding ways of being critical of the GHI, the Central and state governments must accord the highest priority to this issue. Lately, another international report has come, which shows that between 2004-05 and 2019-20, India was able to take 41 crore people out of poverty, which is a major achievement, and shows that with the right kind of leadership and political will, it is possible to free the children of our country from the scourge of stunting and wasting.

The infant mortality figures indicate that a lot needs to be done to improve healthcare facilities, especially in the rural areas. We are spending only 1.2 per cent of our GDP on healthcare, which has to be raised to 2.5 per cent at the earliest. Moreover, healthcare has to be attended to in a holistic manner by synergizing between the schemes related to health, nutrition, water, sanitation and education.

We may concede that the term GHI does give rise to an erroneous perception about hunger. It would be better if this indicator could be called the global nutrition index. But then, as it is said, what’s in a name? The stark reality is before us and denial is not the right response. The problem of under-nourishment has to be understood, accepted and a frontal attack needs to be launched to free the country of this menace.

The writer is an ex-Chief Secretary, Govt of Uttar Pradesh. Views expressed are personal

It may be too early to compare the efficacy of still-evolving NITI Aayog vis-à-vis Planning Commission; the new body has the potential to emerge better

The think tank, NITI (National Institution for Transforming India) Aayog, was formed as a successor to the Planning Commission of India on Jan 1, 2015 through a resolution of the Union Cabinet. Recently, I read that the UP government has also passed a cabinet resolution to do away with the state planning commission and replace it with state NITI Aayog. Some states, particularly those governed by the BJP, have set up their own state NITI Aayogs. Among the opposition-ruled states, while Odisha and Andhra Pradesh have been working closely with the think tank, others like West Bengal are not on board. As more than seven years have passed, it would be interesting to evaluate the performance of NITI Aayog vis-à-vis Planning Commission.

Unlike the Planning Commission, NITI Aayog has no powers to allocate funds to Union Ministries or state governments, or to craft schemes for states. It is for this reason that many state governments hold a lukewarm attitude towards NITI Aayog as they feel that they have nothing to gain financially from this body. I recall the time before 2015, when there used to be an annual exercise in which states would make a detailed presentation regarding resources, schemes, projects, targeted growth rate etc. and put up the picture of various departments presenting the work that had been done, and which needed to be done. After a daylong deliberation between the secretaries of various departments and advisors and expert members of the Planning Commission, the chief minister of the state used to attend the final discussion where the deputy chairman of the Planning Commission would be present. The members then gave their assessment of the work done by the state government and presented their views on the projected resource requirements. I do recall that we took the exercise very seriously and every department was represented in the meeting by its secretary and head of department. For at least 15 days in advance, preparatory meetings at the level of the chief secretary of the state used to take place. At the end of the presentation, the deputy chairman of the Planning Commission would approve the plan size of the state and also allocate specific funds. It used to be a great media event, with the chief minister and the deputy chairman jointly briefing the press. The chief ministers of the states, being aware of the political implications, took a lot of interest in the proceedings. Some of us used to be critical of the exercise as it involved spending a lot of time, and more often than not, we were aware of the plan size that was likely to be approved. However, there was no denying the fact that the entire preparation was itself a great learning experience and the state could project its vision and probable growth rate. In addition, the comments and observations of the expert members were of great value.

Despite the above advantages, many states felt that this was an unnecessary exercise. It was with this in mind that the Planning Commission was disbanded and replaced by the NITI Aayog. It is true that the interaction of NITI Aayog with the states has been limited. However, the current thinking is that there will be a closer engagement with the states. The new vice chairman Suman Bery has observed that the challenge is to work with states. The new CEO Parameswaran Iyer is also a great believer of coordination with states. The fact is that the states will look towards NITI Aayog if they feel that they will get some benefit from doing so, and this is what the NITI Aayog has to demonstrate in the coming years if it has to showcase its relevance to them.

There is no doubt that the NITI Aayog, in its short life, has contributed significantly to policymaking at the Central level. This has largely been due to the dynamic personality of its former CEO Amitabh Kant who, by his sheer force of personality and erudition, put the stamp of NITI Aayog on public policy. Some of the areas where NITI Aayog has contributed is regarding the policy related to electric vehicles and semiconductors. It has handled issues like asset monetization which normally would be tackled by the concerned departments. The mandate of the NITI Aayog is policy and programme framework, cooperative federalism, monitoring and evaluation, and acting as a think tank and knowledge and innovation hub. This mandate is quite wide and would often put NITI Aayog in conflict with the concerned departments. However, once again, the personality of the CEO could determine the success of NITI Aayog, and in Parameswaran Iyer — the new CEO — it has another very capable person holding the reins.

The NITI Aayog has recruited a large number of young professionals as domain experts and, currently, it has a manpower strength of over 700. These lateral entrants have come from private sector or other areas and have provided the relevant knowledge base to NITI Aayog to function as a think tank. It has come to light that several private sector executives have joined NITI Aayog, sacrificing their salary in order to contribute to the development of society and gain expertise which would be of great help to them in the future. NITI Aayog has been ranking the states on various parameters like sanitation, health and education. This does lead to a competitive environment in which states want to outshine each other. However, the states would gain more if NITI Aayog could mentor the low-performing states on how to improve their performance.

It is still a little early to pass a final judgment on the efficacy of NITI Aayog vis-à-vis the Planning Commission but one can say that the organization has justified itself to a large extent. However, it is felt that there is a need for greater coordination with the states. Also, NITI Aayog should not depend merely on the competence of their CEOs but on an institutional arrangement which would equip it with resources. These resources can be used to assist the laggard states in their development journey. It is time that the Union Government gave serious thought to this issue and if it does so then the NITI Aayog would certainly be a major improvement on the earlier Planning Commission.

The writer is an ex-Chief Secretary, Govt of Uttar Pradesh. Views expressed are personal

Urban local bodies need to be equipped with adequate funds, functions and functionaries to ensure robust urban governance and solve regional administrative problems

Most of us must have been shocked to see the images of the flooded Bangalore city, which is the IT capital of India, and houses the officers of all the top multinational corporations — the CEOs of which live in tasteful villas in various posh localities. It is astonishing to see that a city which we normally associate with efficiency and glamour is facing such a situation. The problem of the stormwater drainage system not working properly is like a chronic disease afflicting most cities of India. It reflects poorly on the creation and maintenance of essential infrastructure in cities. Urbanisation is on an increase with 50 per cent of India likely to live in urban areas by 2050. The cities will have to act like engines of growth to make India a developed nation by 2047. On the contrary, even the best cities are facing issues of poor sanitation, lacking water supply, faulty sewerage system, traffic mismanagement, unauthorised slums, poor drainage, and degradation of the environment. We see Mumbai getting submerged each year. As Principal Secretary, Urban Development, I witnessed these problems plaguing most of the cities of Uttar Pradesh as well.

The development story of India has been one where there has always been a focus on schemes related to rural India, as agriculture has been the main sector, and majority of the population still lives in rural areas. In UP, for instance, only 22 per cent of the population lives in urban areas and 65 per cent of the people still subsist on agriculture. However, lately, a realisation has dawned upon policymakers that there is an urgent need to talk about the development of the urban sector. In 2007, the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) was started to provide funds for development of essential infrastructure in cities. This was followed by the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and the smart city mission. There is no doubt that a reasonable amount of funds has been made available by the Central and state governments to selected cities under these missions but, still, there is a wide gap between the requirement and the availability of resources. More than the resources, it is the important reforms that are required in urban governance to enable Indian cities to absorb the funds given to them, and utilise them in the desired manner. The main concern of urban areas has been the generation of urban finance and effective urban governance.

Cities contribute the most to income tax, GST and other state tax collections, but all of this goes to the Central and state governments. Seventy per cent of the GDP of the country comes from urban areas, reflecting their crucial role in the growth of the economy. A major reform has been the setting up of state Finance Commissions that decide on what percentage of state taxes should be devolved to urban local bodies. In UP, this commission has been in operation but only seven per cent of the state taxes are transferred to urban local bodies. There is a demand from urban local bodies for a greater devolution of funds but the state governments have their own priorities, and are not able to transfer sufficient resources to them. A large part of the resources of urban local bodies is utilised in payment of salaries, leaving very little for developmental works. There is a definite case for a larger transfer of resources accruing from state taxes to these urban local bodies. However, it is imperative that urban local bodies should also generate their own revenue. The property tax has an immense unexplored potential but, due to political reasons, elected corporators are not willing to rationalise the assessment of the properties and, as such, this source of revenue remains grossly underutilised. Moreover, there is a lot of potential for leveraging the land with the municipal bodies for raising resources, and also for issuance of municipal bonds, which has been successfully attempted by better-managed local bodies. The stark reality is that the majority of urban local bodies face a serious shortage of funds and, resultantly, even basic urban infrastructure facilities are not created or maintained.

Funds apart, a very important but ignored issue has been that of urban governance. For example, the flooding of the streets that has happened in Bangalore, and is a regular feature of most cities, is often the result of the existing drains being clogged with waste materials and silt. The annual cleaning of drains is done in an inefficient manner and a lot of corruption is involved in this. Sanitation in urban local bodies in many states is looked after, for some strange reasons, by health department doctors. This is not their area of specialisation. Every urban local body requires a special cadre of people trained in solid and liquid waste management. Then, the level of engineers associated with these bodies is not of high quality. Better recruitment and in-service training are required to equip them to construct quality infrastructure. As Municipal Commissioner of Allahabad (now Prayagraj), I was shocked when I found that the gradient of an under-construction drain was being constructed wrongly — leading to a situation where water would accumulate rather than flow. Going further, I feel that every city should have a cadre of city managers, specially recruited and trained for this purpose. For larger urban local bodies, a senior IAS officer should be posted as municipal commissioner.

Funds, functions and functionaries need to be transferred to urban local bodies by the state governments if genuine decentralisation is to take place. The 74th amendment to the constitution has not been implemented in letter and spirit by most state governments, as neither the officers nor the political representatives are willing to share power with local bodies. The mayors of municipal corporations from across the country have this grievance that their posts are merely ceremonial, with the real executive powers vested with the officers. This is exactly the opposite of what prevails in most of the countries, and is not a happy state of affairs. Local issues are best solved by local governments. If the issues of urban governance are resolved on a priority basis, then better generation and management of resources will also be possible, and cities will get the kind of urban infrastructure they deserve.

The writer is an ex-Chief Secretary, Govt of Uttar Pradesh. Views expressed are personal

Electricity (Amendment) Bill, 2022 — through delicensing of the distribution business and incorporation of private players — can address the woes of the power sector

I was Secretary to the Chief Minister of UP in the late 1990s when there was a great sense of euphoria as the first major step had been taken towards power sector reforms. The UP-state electricity board was a huge organisation and had complete control on electricity generation, transmission and distribution. It was running at huge losses and the government had to periodically support it through budgetary allocations. The reforms focused on unbundling of the power sector into three companies, each looking after the three main functions of generation, transmission and distribution. The reforms were vociferously opposed by the electricity department unions having great blackmailing power. Fortunately, the Chief Minister at that time was an astute administrator and could take a stand. The government overcame the strike threat by the unions, and the reforms were implemented. I was handling this sector in the CMO and can recall how we all were excited that this will lead to a new era which will completely revive the power sector. Many other states also implemented these reforms. The electricity act of 2003 was a further step in this direction, which is now being sought to be amended by the new electricity bill. However, it was a false dawn. More than two decades have passed and the DISCOMS are facing huge losses, and not making payments to generation companies on time — leading to poor maintenance of the power plants and low-capacity utilisation.

None other than the Prime Minister of India has pointed out that neither are DISCOMS making payment on time to generation companies nor are the state governments paying subsidy amounts to the DISCOMS regularly. There is a huge backlog in these payments. It is surprising to note that even states like Tamil Nadu, which have controlled their line losses at 15 per cent against the Indian average of 21.6 per cent, have DISCOMS defaulting hugely on paying their dues. Tamil Nadu, Maharashtra and Telangana contribute to 57 per cent of the total dues owed to the power generation companies, followed by Uttar Pradesh, Jammu & Kashmir and Madhya Pradesh that account for another 26 per cent. The total dues stand at a staggering Rs 1,14,222 crores. Government data till March 31, 2022, show that states owe DISCOMS Rs 62,931 crore for services and another Rs 76,337 crores as cost of freebies announced by them. Amongst the states that have defaulted on payment to the DISCOMS, Telangana leads the way with the cumulative standing of Rs 11,915 crore, followed by Maharashtra at Rs 9,131 crores. The government departments are willfully delaying payments to the DISCOMS despite provisions in the budget. Uttar Pradesh is a leader as far as not making payments to DISCOMS for subsidies is concerned at Rs 18,946 crores followed by Madhya Pradesh at Rs 16,240 crores. It is clear that this kind of a situation is not sustainable; it is not only having an adverse impact on the power sector but also threatens to derail the entire growth path of the nation. It is interesting to note that not only the relatively backward states but also advanced states like Maharashtra and Tamil Nadu are facing these problems. Gujarat is perhaps the only exception. This clearly gives a call for urgent action at both the Center and state levels.

The new electricity amendment bill is making a bold effort to resolve these issues even as some of the measures may not be popular. This is particularly so in the light of populist steps being taken by various state governments, like providing free electricity to farmers and other consumers. Debate is going on whether the promises are in the nature of freebies which are best avoided if the fiscal health of the DISCOMS and the state governments has to be maintained.

One of the main amendments proposed relates to delicensing of the distribution business and bringing in the private sector apart from allowing portability and reducing entry barriers. This is important as the earlier reforms, which I have mentioned, have not succeeded because one monopoly replaced another. Except for a few states or some cities, the private sector has not been able to enter into the power distribution sector. The government companies continue to enjoy the benefits of monopoly, and the lack of competition leads to gross inefficiencies which are manifested in large technical and commercial losses. The consumer also does not get the benefit of low tariff or better service. It was visualised that if the state governments want to give subsidies to any segment of the consumers, then they should compensate the DISCOMS from the state budget but as we have seen from the data quoted above most of the states are not honoring this commitment. This bill is being opposed by the states on the ground that power is in the concurrent list and amendments are encroaching on the principle of federalism. The reality is that the problem has become endemic and the states on their own are not able to resolve it. The Government of India cannot be a bystander and there is a rationale for it to intervene.

Once again, the power sector employees and engineers are also agitating as they see it as a step in the direction of privatisation. It is pointed out that private sector companies will take advantage of the DISCOM network created by the public sector. This is an age-old debate on the role of the private sector vis-à-vis the public sector. However, we cannot turn away from the reality that the DISCOMS functioning as a monopoly public sector have not been able to deliver the goods, and economic logic clearly states that if competition is allowed then power distribution will become much more efficient, ensuring better public service delivery. My experience in Uttar Pradesh points to the fact that there are some genuine issues regarding the entry of the private sector into distribution. They are willing to do cherry-picking — they want to take up distribution in urban areas but avoid the rural sector where billing and collection of dues is a difficult task. I guess the only way out of this is to have packages comprising both the urban and rural segments and offer them to the private sector also. If we want to have real competition then we cannot leave the DISCOMS straddled with poor revenue-generating areas.

Moreover, unless all electricity connections are covered by smart metering, and a system is evolved where subsidies are paid directly to the targeted consumer, things are not going to improve. The power sector in the states is highly politicised. By just improving the governance and linking performance to postings and promotions, thereby holding the officers of the department accountable, a huge difference to the position of the utilities can be made. However, this is easier said than done as there are a lot of vested interests involved. It is also true that state electricity regulatory commissions have not been able to fully play their role as envisaged, and most of them still function almost like state departments.

There is no denying that serious reforms are required in the sector otherwise no intervention will succeed. I recall that as Chief Secretary of UP in 2015, we implemented the UDAY scheme where we cleansed the balance sheet of DISCOMS by taking over 50,000 crores of their dues but within a few years things have gone back to ground zero as the reform measures had not been properly implemented. It is good that the bill has been referred to the standing committee for detailed examination from all angles. It is hoped that the Center and states will work together to reform this sector which is otherwise moving towards disaster.

The writer is an ex-Chief Secretary, Govt of Uttar Pradesh. Views expressed are personal