📰 India adds five more Ramsar sites
Three of them are in Tamil Nadu and one each is in Madhya Pradesh, Mizoram
•India has added five more Ramsar sites, or wetlands of international importance, bringing the number of such sites in the country to 54, Environment Minister Bhupendra Yadav said on Tuesday.
•“Delighted to inform that 5 more Indian wetlands have got Ramsar recognition as wetlands of international importance,” Mr. Yadav tweeted.
•These are the Karikili Bird Sanctuary, Pallikaranai Marsh Reserve Forest and Pichavaram Mangrove in Tamil Nadu, the Sakhya Sagar in Madhya Pradesh and the Pala Wetlands in Mizoram.
•India’s Ramsar wetlands are spread over 11,000 sq.km — around 10% of the total wetland area in the country — across 18 States. No other South Asian country has as many sites, though this has much to do with India’s geographical breadth and tropical diversity. The U.K. (175) and Mexico (142) — smaller countries than India — have the most Ramsar sites, whereas Bolivia spans the largest area with 1,48,000 sq.km under the Convention protection.
•Being designated a Ramsar site does not necessarily invite extra international funds, but the States — and the Centre — must ensure that these tracts of land are conserved and spared from encroachment. Acquiring this label also helps with a locale’s tourism potential and its international visibility. Until 1981, India had 41 Ramsar sites, though the past decade has seen the sharpest rise —13 — in designating new sites.
•Wetlands, according to the Environment Ministry, are an “area of marsh, fen, peatland or water; whether natural or artificial, permanent or temporary, with water that is static or flowing, fresh, brackish or salt, including areas of marine water the depth of which at low tide does not exceed six metres, but does not include river channels, paddy fields, human-made water bodies/ tanks specifically constructed for drinking water purposes and structures specifically constructed for aquaculture, salt production, recreation and irrigation purposes.”
•To be Ramsar site, however, it must meet at least one of nine criteria as defined by the Ramsar Convention of 1961, such as supporting vulnerable, endangered, or critically endangered species or threatened ecological communities or, if it regularly supports 20,000 or more waterbirds or, is an important source of food for fishes, spawning ground, nursery and/or migration path on which fish stocks are dependent upon.
•The National Wetland Inventory and Assessment compiled by the ISRO estimates India’s wetlands to span around 1,52,600 square kilometres.
Realpolitik may have trumped the Biden administration’s rather vocal positions on principles in the region
•Two contrasting pictures emerged out of U.S. President Joe Biden’s four-day visit to West Asia. The first was from his visit to Israel, where Mr. Biden was awarded the Presidential Medal of Honour. The second was from his visit to Saudi Arabia where a cold fist bump with Crown Prince Mohammed bin Salman foretold the chronicles of an increasingly awkward bilateral relationship.
Compulsions driving Biden
•The compulsions driving Mr. Biden’s trip to West Asia have been evident. First, he faces the same challenges that several of his predecessors faced in navigating the U.S.’s West Asia policy, especially the Israel-Palestine conflict and Washington’s strenuous relations with Iran.
•Second, Mr. Biden’s trip to Saudi Arabia signalled a re-prioritisation of his administration’s interests, compelled by the Russia-Ukraine war and its ramifications on the global food and energy situation. In principle, his meeting with the Crown Prince was a walk back from his earlier promise in 2019 of keeping away from the Kingdom, after U.S. intelligence concluded in its assessment that the Saudi leader was directly involved in the killing of journalist Jamal Khashoggi in 2018.
•Although Mr. Biden made a veiled attempt to criticise the Saudi leader, the meeting’s focus on bilateral cooperation in 5G technology and integrated air defence, and the fact that Mr. Biden welcomed Saudi Arabia’s plan to strategically invest in projects aligning with U.S. Partnership for Global Infrastructure and Investment (PGII) goals, all point to Washington’s need more than Riyadh’s.
•Furthermore, the Crown Prince did not make any public commitment to increase oil production. With Saudi Arabia, Mr. Biden is perceived as having skirted critical issues in the bilateral relationship such as the release of political prisoners, clemency for opponents of the regime, and easing of travel restrictions, especially for those who hold dual citizenship in the two countries.
•However, two developments from Mr. Biden’s visit could result in positive externalities for the region: one, the consensus to sustain a UN-mediated truce in Yemen and two, the opening of Saudi airspace for civilian aircraft flying to and from Israel. The aim of the former is to translate the truce, which has led to 15 weeks of peace, into a durable ceasefire and political process between Yemen and Saudi Arabia, creating conducive grounds for development and aid in war-ravaged Yemen. The latter emboldens the spirit and objectives of regional bonhomie, which the U.S. sought through the Abraham Accords. The Biden administration has tried to add a different hue to the Abraham Accords by establishing the Negev Forum, following up from the Negev Summit held in March 2022.
The energy situation
•At the heart of Mr. Biden’s trip to West Asia lay the global energy situation, exacerbated by the conflict in Ukraine. There is a strong possibility that gas prices in the U.S. may surge as much as three times the current value before the U.S. midterm elections in November. As stricter Western sanctions on Russia kick in, Russia is expected to retaliate by even halting supplies to Europe ahead of the December 5 deadline set by European countries to fully ban Russian cargo ships carrying oil to Europe. Among the top priorities for the Biden administration during the visit to the region were to ensure predictability in energy supplies, stabilise energy prices, curb inflation, assure European allies of energy supplies before winter, and convert these into domestic support for the Democrats in the midterm elections.
•As Russia has cut oil and gas supplies to European countries significantly, there is a new energy scramble in Europe which is characteristically both long and short term. In the short term, European countries such as Germany and Austria are bracing for a harsh winter amid limited energy supplies and possibly the threat of a total cut-off by Moscow. In the long term, the U.S. has led the Western effort to establish alternate energy supply routes to ensure energy security for Europe even amid limited Russian supplies.
•Mr. Biden’s trip to West Asia also saw several other meetings with heads of state as part of his meetings with Gulf Cooperation Council countries in Jeddah including Prime Minister Al-Kadhimi of Iraq; President of the UAE, Sheikh Mohammed bin Zayed; Egyptian President Abdel Fattah Al Sisi; Amir Sheikh Tamim Bin Hamad Al Thani of Qatar; King Hamad bin Isa Al Khalifa of Bahrain; and King Abdullah II of Jordan. Much in line with Mr. Biden’s visit to Saudi Arabia, his meetings with other regional leaders ended without any substantive breakthrough.
Seeking a toehold
•With the first leaders’ meet of the I2U2 group (comprising India, Israel, the UAE and the U.S.), sometimes referred to as the West Asian Quad, the Biden administration may have found a new toehold in West Asia. The I2U2, beyond its promises of integration, is of strategic value to the U.S. on the back of troop pull-out from Afghanistan, a not-so-favourable relationship with Saudi Arabia and a hostile relationship with Iran. The group’s limited focus in this meeting on food security and energy security is understandable given its recent launch, but its agenda of tying the West Asian region with South Asia through innovation, private sector investments, initiatives in water, energy, transportation, space, health, and the promotion and development of critical emerging and green technologies depict an integrated inter-regional future for the two regions.
•Since the beginning of his term, Mr. Biden has sought a reorientation in the U.S.’s West Asia policy. Resetting relations with Iran through a reworked Joint Comprehensive Plan of Action, which would have the U.S. back in the agreement; troop pull-out from Afghanistan, which is having regional security ramifications; and a principled support to democracies translating into a calibrated distancing from regional autocracies and dictatorships were all part of the recalibration. Expectedly, one of the few continuities that Mr. Biden did not want to disturb was the U.S.’ relations with Israel.
•The Russia-Ukraine war and its implications have shown that the U.S.’s somewhat tenuous relations with countries in the region will continue despite underlying concerns about human rights and political freedom. For now, realpolitik and the compulsions it has engendered for Washington may have trumped the Biden administration’s rather vocal positions on principles. And it may well be a wise choice in the end if it translates into domestic political support in the U.S. and a more favourable West Asia for Biden.
📰 Seeking to destroy India’s civil society
Government is slowly chipping away at the rights of civil society groups using laws such as FCRA, PMLA
•Even though Prime Minister Narendra Modi proclaimed India as the mother of democracy on the eve of the G7 summit on June 26, 2022, the government’s attack on civil society has reached its zenith. That the Indian state is deeply suspicious of non-governmental organisations (NGOs) and civil society leaders was evident even from the 73rd graduation ceremony of the Indian Police Academy in November 2021. National Security Adviser and the Prime Minister’s close aide Ajit Doval had warned budding police officers that civil society was the new frontier of war.
•The failure to protect minority rights could have grave consequences in a majoritarian political dispensation. Even though it is well known that neighbouring Pakistan’s majoritarianism led to its dismemberment, the Indian state is pursuing a similar course.
•The Constitution and law sought to protect minority communities and mandated equal rights and protection from the state to persons of all faiths and identities. According to that idea of India, these rights were deemed essential for the consolidation of the Indian state where citizens needed to feel a sense of belonging. Even though civil society organisations have contributed to the constitutional frame, they undoubtedly need to be regulated for defending those values.
Setting an example
•On June 25, 2022, renowned public interest lawyer and human rights activist Teesta Setalvad was arrested for allegedly misleading the Supreme Court regarding the Gujarat massacre. Not only did the Gujarat government fail to adequately record the Gujarat killings of 2002, the lawyer, who took the case to the Supreme Court, and the two non-compliant senior retired officers, are in prison. According to a First Information Report (FIR) filed by a police inspector following the favourable Supreme Court ruling of June 24, 2022 the three persons colluded to help the wife of the slain Congress Member of Parliament (MP) Ehsan Jafri to concoct stories regarding the Muslim massacre. These concocted stories, it was argued by Home Minister Amit Shah to a friendly news agency ANI, had harmed the reputation of many, including Prime Minister Narendra Modi himself.
•Civil society is targeted in other systematic ways as well. The Foreign Contributions (Regulation) Act (FCRA), and the Prevention of Money Laundering Act (PMLA), used in conjunction with a range of other measures such as the Unlawful Activities Prevention Act (UAPA), are deployed by the government to browbeat and shepherd civil society in a majoritarian Hindu nationalist direction.
•Let us take the case of the FCRA. Indian NGOs need an FCRA clearance for using foreign funds for developmental work. The FCRA amended in 2010 by the Congress-led United Progressive Alliance (UPA), gave substantial discretionary powers to the state to deal with NGOs. NGOs now needed to renew their licences every five years.
•The sheer number of FCRA cancellations, however, suggest that the Bharatiya Janata Party (BJP) government has cancelled an unprecedented number of licences using the 2010 law.
•Our calculations suggest that of the 20,679 civil society organisations that lost their registration between 2011 and May 2022, 3,987 were denied the same during the period of Congress-UPA rule (2011-2014). The vast majority of 16,692 NGOs, however, were denied registration between 2015 and 2022.
•The large number of FCRA licence cancellations during the BJP rule between 2015 and 2020 is even more puzzling. Of the 16,692 NGOs that lost their licences between 2015 and 2022, 16,679 were denied the right between 2015 and 2019 before the Act was amended in 2020. No licence was withdrawn in 2020. A cursory look at these withdrawals suggests that increased compliance requirements enabled the state to flush out a large number of NGOs.
FCRA amendment of 2020
•Thereafter, the FCRA amendment in 2020 was another blow to the NGO sector. This occurred at the very moment when segments of civil society had worked tirelessly for COVID relief. The amendments were hurriedly passed without much parliamentary deliberation. After the 2020 amendment, NGOs could spend less on administrative costs. Finally, all NGOs were required to operate their foreign accounts through the State Bank of India’s branch located at Parliament Street in New Delhi. This would enable the state to track foreign funding organisations even more closely. The Supreme Court’s opinion of April 8, 2022, on a writ petition largely upheld the state’s intent in the 2020 amendments.
•Even Indian NGOs that worked exclusively with domestic funds were not spared. Finance Minister Nirmala Sitharaman announced in her 2020 Budget speech that the tax-free status of domestic donations would be reviewed every five years. This was also the time when domestic funding organisations had been largely coerced to reduce or halt human rights-related grants. Equally, government grants were largely discontinued.
•The period after the 2020 amendment was characterised by the demonstration effect of punishing a few significant players that worked either for the minority rights or the poor.
•Oxfam’s licence was simply not renewed, a mechanism permissible under the FCRA amendment of 2010. Oxfam was generating widely publicised reports regarding the plight of migrant labourers and conditions of the poor during the pandemic. These reports had received worldwide attention. The group was also working to protect workers’ rights.
•NGOs working for minority rights have an even tougher time. The Commonwealth Human Rights Initiative’s FCRA approval, for example, was suspended for some time, after which its licence was cancelled earlier this year. Other human rights-oriented organisations such as INSAF and People’s Watch were also denied FCRA permissions.
•Finally, the Prevention of Money Laundering Act (PMLA) has been reimagined as a tool against civil society leaders and politicians. This is a penal law that can lead to imprisonment. Typically, the Enforcement Directorate (ED) of the Department of Revenue has wide-ranging powers to search and arrest citizens under the PMLA.The ED was used to attack NGOs such as Amnesty International and the Centre for Equity Studies that have worked incessantly for minority rights. The CES’s founder Harsh Mander is a Richard von Weizsäcker Fellow of the Bosch Academy. The agency has also been deployed almost exclusively against political opponents such as Rahul Gandhi, Sonia Gandhi and Delhi’s Health Minister Satyendra Jain, among others.
•FCRA and PMLA are potent weapons for subduing the pluralistic nature of Indian society that is at the heart of India’s democracy.
•Social values can be saved if democratic politics protects those values. The million-dollar question is, when will the political Opposition rise? Or, will it rise at all?
📰 Whose GDP is it anyway?
It is time for political leaders to clamour for an overhaul of India’s economic performance measurement framework
•In a few weeks, a quarterly ritual will play out in India. The Government will release the first quarter’s Gross Domestic Product (GDP) growth numbers with some chest-thumping about how India is among the fastest-growing economies in the world. Opposition parties will hold press conferences on the same day to counter such bombast with facts, rhetoric and nitpicking. But the real question is: what is the significance and impact of GDP growth for the common person? The answer: very little.
Growth and jobs
•It is safe to say that the average person’s primary and perhaps sole concern about the economy is the income they can earn. It is well documented that for several years, the single most important demand of people in India is jobs, specifically, a high-quality formal sector job that ensures dignity of work, good income and job security. It is then apparent that GDP growth matters to the average Indian only if it can generate good quality jobs and incomes for them.
•Using data of ‘employment in public and organised private sectors’ published by the Reserve Bank of India (RBI), we can calculate that in the decade between 1980 and 1990, every one percentage point of GDP growth (nominal) generated roughly two lakh new jobs in the formal sector. That is, if India’s GDP grew by 14% every year in the 1980s, it can be said that it created roughly 28 lakh new formal jobs.
•In the subsequent decade from 1990 to 2000, every one percentage point of GDP growth yielded roughly one lakh new formal sector jobs, half of the previous decade. In the next decade between 2000 and 2010, one percentage point of GDP growth generated only 52,000 new jobs. The RBI stopped publishing this data from 2011-12, but one can safely infer using proxy data that in the 2010-2020 decade, the number of new jobs generated for every percentage of GDP growth fell even further.
•In essence, one percentage of GDP growth today yields less than one-fourth the number of good quality jobs that it did in the 1980s. While the actual number of jobs created in each decade is only a rough estimate by the RBI, it is the alarming declining trend in job creation over decades that is more important to ponder. To put it differently, India’s GDP growth today has to be four times its GDP growth in the 1980s to produce the same number of formal sector jobs.
•It is amply clear that the correlation between formal sector jobs and GDP growth has weakened considerably. Ostensibly, high GDP growth now does not necessarily mean more jobs and incomes for people. Hence, GDP growth does not impact the common person today as much as it perhaps did four decades ago. GDP growth may be an important economic measure, but it is becoming increasingly irrelevant as a political measure, since it impacts only a select few and not the vast majority.
•This divorce of GDP growth and jobs is both a reflection of the changed nature of contemporary economic development with emphasis on capital-driven efficiency at the cost of labour and GDP being an inadequate measure. Nobel laureate Simon Kuznets, who conceived of GDP as a measure of economic performance, never intended it to be the single-minded economic pursuit for a nation that it has now become, and warned repeatedly that it is not a measure of societal well-being. Irrefutably, GDP is an elegant and simple metric that is a good indicator of economic progress which can be compared across nations. But a compulsive chase for GDP growth at all costs can be counter-productive, since it is not a holistic but a misleading measure. As the saying goes, when a measure becomes a target, it ceases to be a good measure.
The obsession with GDP
•The excessive obsession over GDP growth by policymakers and politicians can be unhealthy and dangerous in a democracy. If growth in GDP does not translate into equivalent economic prosperity for the average person, then in a one person-one vote democracy, exuberance over high GDP growth can backfire and trigger a backlash among the general public who may feel left out of this party.
•Sri Lanka’s mass uprising and people’s revolution can partly be explained through this prism of the structural break between headline GDP growth and economic prosperity for the people. Sri Lanka produced two lakh jobs for every percentage of GDP growth in the 1990s decade; this dwindled to 90,000 by 2020. While economic mismanagement and political cronyism may have been the trigger for the recent mass protests in Sri Lanka, the underlying malaise is the dissonance between GDP growth and economic prosperity for the average person.
•To be clear, this phenomenon is not unique to India or Sri Lanka or to the governance model of any one political ideology or another. The U.S. today produces fewer new jobs for every percentage point of GDP growth than it did in the 1990s. China produces one-third the number of new jobs today than it did in the 1990s for every percentage of its GDP growth.
•The fact that employment intensity of economic growth is declining is neither a new finding nor a surprise to most economists. Yet, given its elegance as a measure, most economists and technocrats still focus heavily on GDP growth. But the perils of the obsession over GDP growth will be felt by politicians who have to answer voters on lack of jobs and incomes despite robust headline growth.
•The World Bank and International Monetary Fund may proclaim winners among nations in some inane GDP growth contest every year, but when ‘fastest’ growing economies are unable to provide prosperity and social mobility for their people, this disillusionment is bound to erupt and manifest itself through the political process. Voter disenchantment over the economy not working for them is already rife in many democracies across the world that have catalysed agitations and social disharmony. Electoral outcomes in favour of extreme positions in mature democracies such as the U.S., the U.K., France and Germany in the last decade may partly be a reflection of voters’ sense of deception over economic gains.
An expanded dashboard
•Back in 2008, the then President of France, Nicolas Sarkozy, assembled the ‘Commission on the Measurement of Economic Performance and Social Progress’ and tasked Nobel Laureate economists Joseph Stiglitz, Amartya Sen and others to develop a more comprehensive measurement framework of economic and social performance as an alternative to the excessive reliance on GDP as a sole measure. The report concluded that “what we measure affects what we do” and recommended an expanded dashboard of multiple indicators unique for each country.
•GDP growth has turned into a misleading and dangerous indicator that portrays false economic promises, betrays people’s aspirations and hides deeper social problems. The statistical aphorism ‘Everything that counts cannot be counted and everything that can be counted does not count’ succinctly summarises the GDP growth paradox facing many democracies today. It is time for India’s political leaders, especially those in the Opposition, to not be drawn into facile quibbles over GDP growth every quarter and instead clamour for an overhaul of India’s economic performance measurement framework to reflect what truly matters to the common person.
📰 A path to global connectivity
Integrating terrestrial 5G networks with LEO satellite networks is the next step in communication infrastructure
•As terrestrial 5G mobile networks are being rolled out across countries, there is a renewed interest in integrating Non-Terrestrial Networks, the primary one being the low latency Low Earth Orbit (LEO) satellite networks (SatNets), as a complement to terrestrial networks. Towards this, Starlink, operated by the Elon Musk-owned SpaceX, and OneWeb, promoted by Bharti Global, have launched about 2,500 and 648 LEO satellites respectively at an altitude of about 1,200 km with the objective of promoting global broadband connectivity. There are other players such as Reliance Jio in a joint venture with Luxembourg-based SES and Amazon’s Project Kuiper.
•There are primarily three main use cases for integrating LEO SatNets with terrestrial 5G networks: (i) service continuity to provide seamless transition between terrestrial networks and SatNets in case of public safety, disaster management and emergency situations; (ii) service ubiquity to provide 5G services in unserved and underserved areas of the world, thereby bridging the digital divide; (iii) service scalability that utilises the unique capabilities of SatNets in multicasting and broadcasting similar content over a large geographical area. The LEO SatNets can provide service not only to stationary but also to in-motion users.
Integration process
•Satellites and terrestrial networks have always been considered two independent ecosystems, and their standardisation efforts have proceeded independent of each other. In view of the above advantages, standard-setting organisations such as the Third Generation Partnership project (3GPP), comprising telcos and equipment manufacturers around the world, started integrating SatNets in the standardisation process.
•As an extension to terrestrial networks, satellites were first mentioned in a deployment scenario of 5G in 3GPP Release 14. This was to provide 5G communication services for areas where terrestrial coverage was not available and also to support services that could be accessed more efficiently through satellite systems, such as broadcasting services and delay-tolerant services.
•Interestingly, wireless communications through LEO satellites over long distances is proven to be 1.47 times faster than communication over the same distance through terrestrial optic fibre. It is this advantage along with global coverage that provide a strong use case for LEO SatNets to complement terrestrial optic fibre networks.
Issues to be addressed
•This would necessitate addressing issues around frequencies to be allocated for satellite broadband, the methodology of allocation, the relatively higher cost of consumer equipment and the placement and interconnections of SatNets with terrestrial public landline/ mobile networks at the ground stations.
•The other major challenge in LEO SatNets is the cost of user terminal and access charges to the end users. A recent research analysing both Starlink and OneWeb concludes that the standalone LEO SatNets have a distinct cost advantage only if the density is less than 0.1 person per square km compared to terrestrial broadband networks. Hence it is to the advantage of LEO SatNet providers to integrate their networks with terrestrial 5G networks to improve the cost economies.
•Realising the advantages, the Government, in its National Digital Communications Policy 2018, has indicated a number of areas including the development of an ecosystem for local manufacturing of satellite communication systems and promoting participation of private players for the strengthening of satellite communication infrastructure in the country.
•Accordingly, the New Space India Limited (NSIL), a public sector enterprise, was established in 2019 under the administrative control of the Department of Space, to re-orient space activities from a ‘supply driven’ model to a ‘demand driven’ model, thereby ensuring optimum utilisation of the space assets. The Department of Space also established in 2020 a new regulatory body named the Indian National Space Promotion and Authorisation Centre (IN-SPACe).
•IN-SPACe is intended to provide a level playing field for private companies to use Indian space infrastructure and to promote and guide the private industries in space activities through encouraging policies and a friendly regulatory environment. All these, along with the proposed revisions to the Satellite Communications Policy of the Government, will provide the required fillip to LEO SatNets to become an integral part of the communication infrastructure of the country.
📰 Russia to leave ISS after 2024, focus on building own outpost
Roscosmos chief tells Putin Moscow will fulfil its obligations
•Russia will pull out of the International Space Station after 2024 and focus on building its own orbiting outpost, the country’s new space chief said on Tuesday amid high tensions between Moscow and the West over the fighting in Ukraine.
•Yuri Borisov, appointed this month to lead the state space agency, Roscosmos, said during a meeting with President Vladimir Putin that Russia will fulfill its obligations to its partners before it leaves.
•“The decision to leave the station after 2024 has been made,” Mr. Borisov said, adding: “I think that by that time we will start forming a Russian orbiting station.”
•Mr. Borisov’s statement reaffirmed previous declarations by Russian space officials about Moscow’s intention to leave the space station after 2024 when the current international arrangements for its operation end.
•NASA and other international partners hope to keep the space station running until 2030, while the Russians have been reluctant to make commitments beyond 2024.
•The space station is jointly run by the space agencies of Russia, the U.S., Europe, Japan and Canada. The first piece was put in orbit in 1998, and the outpost has been continuously inhabited for nearly 22 years. It is used to conduct scientific research in zero gravity and test out equipment for future space journeys.
•It typically has a crew of seven, who spend months at a time aboard the station as it orbits about 400 km from Earth. Three Russians, three Americans and one Italian are now on board.
📰 Power tariff revisions and the state of DISCOMs
Why are power distribution companies swimming in losses? Why are States reluctant to hike power prices?
•On July 13, the Tamil Nadu Generation and Distribution Corporation (Tangedco) filed a general retail power tariff revision petition with the Tamil Nadu Electricity Regulatory Commission proposing to hike power tariffs by 10% to 35%. Mounting losses, outstanding loans and the consequent increase in interest burden, have compelled the Tangedco to file the petition.
•According to Niti Aayog’s report of August 2021, most power DISCOMs in the country incur losses every year — the total loss was estimated to be ₹90,000 crore in the financial year 2021.
•Despite the Centre’s prescription for annual or periodical revision of retail power tariff, States have not complied. The general approach is to use electricity as a tool for political agenda and make promises to allure people despite knowing that such assurances, if implemented, are not sustainable in the long run.
•The story so far: On July 13, the Tamil Nadu Generation and Distribution Corporation (Tangedco) filed a general retail power tariff revision petition with the Tamil Nadu Electricity Regulatory Commission proposing to hike power tariffs by 10% to 35%. If the proposal comes into effect, expected in September, the hike will be after a gap of eight years. While announcing the government’s decision to increase the tariff, Electricity Minister V. Senthilbalaji maintained that the proposed power tariff hike will not affect one crore domestic consumers and people living in hutments out of a total of around 2.39 crore.
Why has the tariff revision petition been filed by the power utility?
•A number of factors, which include mounting losses, outstanding loans and the consequent increase in interest burden, has compelled the Tangedco to file the petition. Even after joining the Ujwal DISCOM Assurance Yojana (UDAY) — a scheme meant for improving the health of state-owned electricity distribution companies (DISCOM)—in January 2017, Tamil Nadu could not bring down the gap between the Average Cost of Supply (ACS) and the Average Revenue Realised (ARR) to nil by 2018-19, as stipulated in the scheme. On the contrary, the gap rose to ₹1.07 per unit in 2019-20 against ₹0.6 per unit in 2015-16, according to a report of the Comptroller and Auditor-General on the implementation of the UDAY scheme by the Tangedco which was tabled on the floor of the State Assembly in May 2022. The Minister told the media that the cumulative financial losses went up from ₹18,954 crore in 2011-12 to ₹ 1,13,266 crore in 2020-21. What is more important than all these factors is the commitment provided by the Tamil Nadu government to fully absorb Tangedco’s losses, due to which the State government has made an allocation of ₹13,108 crore this year in the form of budgetary support.
•The Centre tightened its focus on the State by having withheld, through the Power Finance Corporation (PFC) and the Rural Electrification Corporation (REC), the release of ₹3,435 crore under the Special Liquidity (Aatmanirbhar Bharat Abhiyan) loan scheme, apart from not releasing the grant of ₹10,793 crore under the Revamped Distribution Sector Scheme (RDSS). The Reserve Bank of India (RBI) has issued a guideline to commercial banks that if lending is to be provided to any State-owned power utility including DISCOMs, the entity should have filed a tariff revision petition by November 30 every year.
What about other power DISCOMS in the country?
•The Tamil Nadu case is an example of what is happening in the distribution sector in the country. According to Niti Aayog’s report of August 2021, most power DISCOMs incur losses every year — the total loss was estimated to be ₹90,000 crore in the financial year 2021. Due to these accumulated losses, DISCOMs were unable to pay for generators on time — as of March 2021, an amount of ₹67,917 crore was overdue.
•To help these DISCOMs, the Centre in May 2020, announced a Liquidity Infusion Scheme (Aatmanirbhar Bharat Abhiyan), under which loans of ₹1,35,497 crore have been sanctioned. As of December 31, 2021, a total of ₹1.03 lakh crore has been disbursed.
Where do other States stand on power tariffs?
•Despite the Centre’s prescription for annual or periodical revision of retail power tariff, States have found the exercise painful, as the parties in power in the States link the process to their prospects at the time of Assembly or Lok Sabha elections.
•In Andhra Pradesh, the power tariff hike for domestic consumers approved in March, took place after a gap of two decades. Kerala, where the increase came into effect in late June, had it after three years. In March 2022, the Bihar Electricity Regulatory Commission issued an order, rejecting the proposal for a 9.9% hike. In Punjab, no changes in the tariff were made and on the contrary, since the beginning of this month, domestic consumers in the State have been given free electricity up to 300 units each month.
•In Tamil Nadu, all domestic consumers are entitled to 100 units of free electricity bi-monthly since May 2016 when the AIADMK retained power. The existing DMK regime has decided not to disturb this arrangement. In Gujarat, the Aam Aadmi Party (AAP) has promised free electricity if it is voted to power in the Assembly election to be held later this year. The general approach of many parties is to use electricity as a tool for their political agenda and make promises to allure people despite knowing that such assurances, if implemented, are not sustainable in the long run.
Do States provide subsidies to sectors like agriculture?
•Yes. A common feature of the power distribution policies of the States is to provide free or heavily subsidised supply to agriculture. The connections for the farm sector are unmetered. Tamil Nadu, which has been implementing free power supply for the sector since the mid-1980s, had long resisted the installation of meters even for fresh connections. But it has been allowing the installation of meters for agricultural pump sets. A senior official claims that the meters are there only to do an assessment of consumption and not for billing. Segregation of feeders has been suggested as an option to arrive at the accurate consumption of the farm sector so that the disproportionate quantum of consumption is not attributed to agriculturists in the absence of meters. Gujarat is cited as a success story in this regard. In Manipur, according to the Niti Aayog’s report, prepaid metering was supplemented with improved power supply, resulting in improved billing and collection efficiency as well as lower commercial losses.
•The Madhya Pradesh Electricity Regulatory Commission, in its tariff order of March 2022, came out with an incentive package in the area of demand side management. It stipulated that an incentive equal to 5% of energy charges should be given on installation and pushed for the use of energy saving devices such as ISI energy efficient motors for pump sets and programmable on-off/ dimmer switch with automation for street lights.
