1. 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.
2. 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.
Ramsar Convention is a convention on wetlands that was signed in 1971 in the Iranian city of Ramsar. The negotiations for the convention started in the 1960s by the different countries and NGOs for the protection of wetlands and their resources. Finally, it came into force in 1975. There are 42 Ramsar Sites in India listed under Ramsar Convention.
India has added 10 more wetlands to the sites protected by the Ramsar Convention.
- Maharashtra: Nandur (state’s first).
- Punjab: Keshopur-Miani, Beas Conservation Reserve, and Nangal.
- Uttar Pradesh: Nawabganj, Parvati Agra, Saman, Samaspur, Sandi, and Sarsai Nawar.
This addition will help in achieving India’s ambitious mission ‘Nal se Jal’ which aims to provide piped water connection to every household by 2024.
Evolution of Ramsar Convention
The Ramsar Convention came into force in 1975 with a mission to conserve and use wisely all wetlands through local and national actions and international cooperation, as a contribution towards achieving sustainable development throughout the world. The evolution of this convention on wetlands is depicted below:
What is the purpose of the Ramsar Convention?
The convention works on three pillars that define the purpose of the Ramsar Convention:
- Wise Use – To work towards the wise use of all wetlands
- List of Wetlands of International Importance – Designate suitable wetlands under the Ramsar List to effectively manage those
- International Cooperation – To bring cooperation internationally over the transboundary wetlands, shared wetland systems and shared species.
As per the broad definition of Ramsar Convention, “Wetlands are “areas 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.”
Examples of Wetlands are:
- Marine and coastal areas
- Lakes and rivers
- Marshes and peatlands
- Groundwater and human-made wetlands such as rice paddies, shrimp ponds, and reservoirs
Important Facts about the Ramsar Convention
- It is the only international treaty that addresses a specific ecosystem (wetland.)
- Originally, the treaty focussed on the conservation of the habitats for waterbirds.
- The official name of the treaty is The Convention on Wetlands of International Importance, especially as Waterfowl Habitat.
- With time, the treaty has broadened its horizon and covers all aspects of wetland conservation.
- The Ramsar Conventions contains three important subjects:
- The contracting parties which are now 171 in numbers have to designate suitable wetlands in their territory under the Ramsar List of Wetlands of International Importance.
- The designated wetlands have to be wisely used and taken care of.
- Shared wetland systems over the territories of more than one contracting party have to be used wisely by the parties concerned after due consultation
- As of June 2021, there are 2422 wetlands in the list of wetlands of international importance.
- Ramsar Convention is not a regulatory regime.
- Ramsar Convention was modified by the Paris Protocol in 1982 and by the Regina Amendments in 1987.
- Montreux Record – It is a mechanism that was launched in 1990 and is associated with the Ramsar Advisory Mission. It is a register of the list of those Ramsar Sites that need urgent attention. One can read more about Montreux Record at the linked article.
- World Wetlands Day – It was first celebrated in 1997. It is celebrated each year on 2nd February to mark the anniversary of the Ramsar Convention and promote its mission.
- A conference of the contracting parties (COP) to the convention meets every three years.
- The Ramsar Convention has six international organization partners:
- Birdlife International
- Wetlands International
- International Water Management Institute
- Wildfowl and Wetlands Trust
- The convention comes with a six-year strategic plan. The latest one is the 4th Ramsar Convention Strategic Plan 2016-2024 which was approved at COP12 of the convention.
- Ramsar Convention’s Standing Committee has 18 members that are elected at COP till the next COP elects new members.
- The Convention works in three languages – English, Spanish and French.
India and Wetland Conservation
Ramsar Convention entered into force in the country on 1st February 1981. India’s initiatives to conserve the national wetlands (4.63% of the total geographical area) are:
- Wetlands (Conservation and Management) Rules, 2017
- The Ministry of Environment, Forest & Climate Change released a set of guidelines in January 2020 for implementation of the Wetland Rules 2017.
- India regulated the following wetlands:
- Wetlands designated under the Ramsar List.
- Those wetlands are notified under central, state, and UT rules.
- India does not regulate the following wetlands under Wetlands Rules:
- River channels
- Paddy fields
- Human-made water bodies specifically constructed for drinking water purposes; aquaculture purposes; salt production purposes; recreation purposes; and for irrigation purposes
- Wetlands falling within areas covered under the Indian Forest Act, 1927; Forest (Conservation) Act, 1980; and State Forest Acts.
- Wetlands falling within areas covered under the Wildlife (Protection) Act, 1972.
- Wetlands falling within areas covered under the Coastal Regulation Zone Notification, 2011.
3. Editorial-1: 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.
4. Editorial-2: 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?