Power sector reforms: welcome development

02 Feb 2000

The Government of Karnataka has, it is reported, decided on privatizing distribution by the end of the year 2001. This is an extremely welcome development, and according to newspaper reports, the Union Ministry of Power has got into an agreement with the Government of Karnataka to provide certain financial allocations in response to the plans of the state to pursue a time-bound path of reforms. This too is a very healthy and welcome development because in the past the divergence of stands taken by the centre and some states has led to sluggishness in the reforms process with several states unwilling to participate in a purposeful manner. The future of the power sector would depend entirely on the pace of reforms that are introduced in this vitally important area of activity; so, therefore, would the country?s economic progress too. The centre in the past has espoused a growing role for the private sector linked with the process of reforms as the stated policy for development of the sector in India. However, the strategy followed has had less than satisfactory results because the importance of establishing independent regulatory bodies was not realized when a new policy for private sector participation was announced in the early 1990s. Nor was an effort made to link the process of reforms to allocations from the centre. Belatedly it appears that a more result-oriented approach is now being adopted, rather than trying to bring about a general consensus among all the states as was attempted by the convening of a conference of power ministers in the early 1990s. This inevitably led to the lowest common denominator ruling the common agreements achieved. The apparent strategy of providing incentives to those states which are willing to assume a leadership role in the reform process is far more pragmatic and likely to yield results not only in these states themselves, but also through emulation by other states which are lagging behind. Karnataka after the recent elections has a forward looking chief minister and a government that appears to mean business. All our efforts must be focused in making power sector reform in Karnataka a success story. For this purpose, substantial intellectual inputs would be required by the state government which should be tapped in requisite measure. With the goal of becoming the knowledge capital of the world, the state should refine its policies with the best knowledge it can harness for the purpose.
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