A REITERATION BY the Prime Minister, Dr Manmohan Singh, that power sector reforms were a necessity may do little to convince some of the parties supporting his Government to go along with the reforms agenda for this sector. The Electricity Act, 2004, passed by Parliament, is still to see full implementation, with the Government again under pressure to put off the deadline for unbundling the State Electricity Boards (SEBs). The trifurcation of the SEBs into generation, transmission and distribution units — the first major step to make the power sector financially viable — is already a year behind schedule and could be put off by another six months if the Government goes along with the demands of some of its supporting parties. The Prime Minister has described the power sector as the "engine of growth''— a proposition which the members of the ruling United Progressive Alliance would have no quarrel with. Equally, few would dispute the critical role of the power sector in spurring economic growth and thereby making a dent on the level of poverty in the country. But it is one thing to agree on the policy goals and quite another to decide on the exact nature of the policy response. Clearly, there doesn't seem to be any consensus within the ruling alliance on the policy framework for this sector.

Today, India is back on the radar of foreign investors and the top honchos of multinationals, flying into the country, speak of substantial investments once the necessary policy framework is in place. Also, investments will materialise only when there is adequate infrastructure and it is back to the power sector again. To be fair, things are happening in the sector, especially in trading. Already, Tripura is selling power to Punjab and such cross-country sales will become common with the commissioning of a wholesale power-trading platform. Consumers, particularly industrial units, would soon have the option of choosing their supplier, based on promises of better pricing and reliable power. The Prime Minister is well aware of these developments on the power front and hence his plea for political support to push through the reforms so that the country benefits from a modern and efficient power supply system.

The political opposition to power sector reforms basically centres around one point — free power to farmers. This contentious issue has defied solution though towards the end of the 1990s there was a ray a hope. The Centre made it clear that the States were at liberty to provide free or concessional power to any section, but it should not be at the cost of the SEB's viability. The State should provide for the subsidy in its annual budget as the Centre does for food or fertiliser subsidy. If this principle is accepted and put into practice, the political opposition to power sector reforms should dissipate but States would have to be prudent in deciding which sections they want to subsidise. The other issues raised by those opposing the Electricity Act should be within the scope of address of a strong power sector regulator. It is time, therefore, that the Prime Minister and his Cabinet colleagues addressed the issue squarely and engaged all shades of political opinion in a fruitful discussion, instead of making statements on power sector reforms at vague platforms across the country.

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