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- Liu Zongyi
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- Institute for International Strategic Studies
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Aug 07 2012
Special interests hold back Delhi’s efforts at reform
By Liu Zongyi
The direct reason for India's massive power cut last week, which blacked out swathes of the country for two days, is the country's inadequate electric power and backward infrastructure. India's power production in 2011 was 866.9 billion kilowatt-hours, less than one-fifth of that of China.
As well as factors like outdated facilities and poorly run power stations, lack of energy tops the reasons why India's power supply falls short of demand.
Coal produces 68 percent of India's power. Coal reserves are mainly in areas with poor transportation and are monopolized by state-run enterprises. As coal exploration is restrained by many factors such as environmental protection, transportation and the low efficiency of state-run enterprises, India's coal production cannot meet the demand. Furthermore, India is short of oil and natural gas.
Besides these objective reasons, the deeper reasons lie in the political and economic systems. India is a federal country with a multi-party system. The central government is weak, while the state governments and various parties are trying their best to secure their own interests. Government orders are sometimes constrained by the federal and multi-party system.
Meanwhile, the democratic system doesn't mean India is an open market. The rapid economic development of India these years has mainly been promoted by the private sectors. The state-owned economy is still playing an important role and the command economy still prevails.
India's power stations cannot expand operations due to long-term losses. Its government provides a lot of power subsidiaries to farmers, while political leaders cannot agree on increasing prices.
India's state-run power firms are 3 trillion rupees ($54 billion) in the red. Power stations are facing a shortage of coal and natural gas, while nuclear power programs are in stagnation due to environmental protests and worries over accidents.
The Indian government has already realized the necessity of enhancing the construction of electric power infrastructure, but it cannot increase investment due to its financial constraints. The government has expressed a wish to attract foreign investment many times. But in reality, it surrenders to pressure from domestic interest groups.
As a result, the government adopted trade protectionism, imposing high import tariffs on power equipment and restraining some countries' investments on India's infrastructure construction. All these are detrimental to India's infrastructure construction and the openness of the economy.
The large-scare power failure in India not only reflects problems in infrastructure construction and energy, but also demonstrates systematic problems.
Many argue that the long-standing political stability of post-Independence India can attributed to its democratic system. But in fact, many policies and measures beneficial to national interests are dropped due to opposition from some groups under the name of democracy.
Successful democratic countries often develop capitalism first, and then adopt the democratic system. But India adopted the democratic system first and is now developing capitalism, which has had its own side effects.
China and India are both representatives of emerging countries. China's achievements in infrastructure sharply contrast with those of India. Yet the development model of China, which emphasizes GDP growth, also results in some severe accidents. Both the two developing countries should reflect upon these problems during modernization.
For any society, reform is costly and will affect interests of many people, but a lack of change is even much more costly, and will even lead to collapse of the whole system.
As well as factors like outdated facilities and poorly run power stations, lack of energy tops the reasons why India's power supply falls short of demand.
Coal produces 68 percent of India's power. Coal reserves are mainly in areas with poor transportation and are monopolized by state-run enterprises. As coal exploration is restrained by many factors such as environmental protection, transportation and the low efficiency of state-run enterprises, India's coal production cannot meet the demand. Furthermore, India is short of oil and natural gas.
Besides these objective reasons, the deeper reasons lie in the political and economic systems. India is a federal country with a multi-party system. The central government is weak, while the state governments and various parties are trying their best to secure their own interests. Government orders are sometimes constrained by the federal and multi-party system.
Meanwhile, the democratic system doesn't mean India is an open market. The rapid economic development of India these years has mainly been promoted by the private sectors. The state-owned economy is still playing an important role and the command economy still prevails.
India's power stations cannot expand operations due to long-term losses. Its government provides a lot of power subsidiaries to farmers, while political leaders cannot agree on increasing prices.
India's state-run power firms are 3 trillion rupees ($54 billion) in the red. Power stations are facing a shortage of coal and natural gas, while nuclear power programs are in stagnation due to environmental protests and worries over accidents.
The Indian government has already realized the necessity of enhancing the construction of electric power infrastructure, but it cannot increase investment due to its financial constraints. The government has expressed a wish to attract foreign investment many times. But in reality, it surrenders to pressure from domestic interest groups.
As a result, the government adopted trade protectionism, imposing high import tariffs on power equipment and restraining some countries' investments on India's infrastructure construction. All these are detrimental to India's infrastructure construction and the openness of the economy.
The large-scare power failure in India not only reflects problems in infrastructure construction and energy, but also demonstrates systematic problems.
Many argue that the long-standing political stability of post-Independence India can attributed to its democratic system. But in fact, many policies and measures beneficial to national interests are dropped due to opposition from some groups under the name of democracy.
Successful democratic countries often develop capitalism first, and then adopt the democratic system. But India adopted the democratic system first and is now developing capitalism, which has had its own side effects.
China and India are both representatives of emerging countries. China's achievements in infrastructure sharply contrast with those of India. Yet the development model of China, which emphasizes GDP growth, also results in some severe accidents. Both the two developing countries should reflect upon these problems during modernization.
For any society, reform is costly and will affect interests of many people, but a lack of change is even much more costly, and will even lead to collapse of the whole system.
Source of documents：globaltimes.cn