Articles by S L Rao

The Electricity Bill, 2001 was intended to enable a major restructuring of the electricity system in India. It would have been better if the government had amended the existing three Acts relating to electricity three years ago and introduced essential changes, leaving an omnibus legislation like the present Bill to evolve over time. In the event, the changes have not happened and the Bill too has yet to be passed. The Bill needs to be cleared speedily. This is despite its many shortcomings which can be addressed through later amendments after the Bill is passed.

The mindset of Indian companies was formed by over 40 years of industrial licensing which limited production capacities. Capacity limitations made premium products the appropriate response. In addition there was the influence of the approach of the multinational companies that value was more important than price and that product features would attract consumers more than low prices. We find it difficult to consciously reduce features, and even value in products, so as to give the mass market consumer what he can afford.

The Electricity Bill 2001 is a step forward in removing the anomalies, inconsistencies and even contradictions in and between existing laws pertaining to the power sector. But it fails to impose deterrent punishments for failures on matters ranging from theft and quality to payment of bills by distributing companies. It has provisions which will violate the transparent functioning of regulatory commissions. While the bill will enable the creation of markets, facilitate the process of private investment in transmission, improve grid discipline and ease somewhat the working of the regulatory commissions, success in improving the supply and quality of electricity and the financial performance of the power sector will depend, in the ultimate analysis, on the speed with which the state electricity boards can be made financially viable. On this the bill has no contribution to make.

The deed is done and the clock cannot be put back. Competition has come into almost all sectors of Indian industry and will increase. It is making the economy more efficient in using resources. A new breed of entrepreneurs and new industries are emerging who are able to operate successfully in this changed environment. This process must accelerate. It is in the interest of the country's growth and competitiveness that the old companies which do not wish to change and reform themselves become extinct.

Business in India is entering a new situation. Competition has increased. New entrants from other countries now compete in India with locals. The costs of failure are very high, as are the rewards for success. The pressures to dilute value systems and have more flexible ethical postures are considerable. Both society and institutions in it must develop structures and systems that enable a core of values against which all actions are measured and which provide boundaries for actions.