Author: cprindia

Recent events show extreme discontent in rural Maharashtra. Fifty-eight silent Maratha Kranti Morchas in one year have mobilized lakhs of people. Recent agitations have demanded reservation for Marathas. And the Kisan Long March was based on a demand for farm loan waivers and implementation of the Swaminathan Commission’s recommendations. All these events indicate a deep-rooted crisis in agriculture and allied sectors in Maharashtra, the share of which in the gross state value added (GSVA) has declined to 11.9% in 2017-18.

The lack of economic opportunities in various parts of Maharashtra is closely tied with the failure of basic infrastructural facilities, mainly water and electricity. Once recognized as the best performing public sector agency, the electricity utility in Maharashtra is now in a state of flux. The distribution sector is constrained by the legacy of high-cost power and large capacity addition but lower-than-expected industrial demand growth. Further, there is pressure from the centre to increase the share of renewable energy (RE), including rooftop solar with net metering. A recent tariff proposal by the Maharashtra State Electricity Distribution Company Ltd (MSEDCL) demanding a 23 per cent hike was met with strong opposition from grassroot activists. In view of these potentially unsettling emerging trends, it is imperative for the state to revise its political strategy of managing the sector.

Figure 1: Financial and Physical Profile: Maharashtra

Figure 1 depicts some recent trends in Maharashtra’s electricity sector. Especially noteworthy is the rising cost of power, now among the highest in India. As a result, the annual revenue requirement for Discoms has ballooned from Rs 2.67/kWh in 2007-8 to Rs 6.15/kWh in 2015-16. At the same time, the share of industrial electricity consumption declined from 45 per cent in 2007-8 to 31 per cent in 2014-15. This was due to sluggish industrial growth and a high number of industrial consumers purchasing power privately. Consequently, industrial revenue decreased by 15 per cent during this period. The installed capacity of RE reached 6.40 GW which, while impressive, came at a high cost. Subsidies to agricultural and powerloom consumers have reached Rs. 10,500 crore in 2014-15, indicating growing pressure on state finances. While distribution losses have consistently declined over the years (down to 14.51 per cent according to the latest tariff proposal), in view of persisting unmetered supply to agriculture, this issue is far from settled. Another worrying trend is backing down of contracted power (6000 MW to 8000 MW per year) due to sales migration away from the grid (to open access consumption). In the case of Mumbai, both Tata Power and Reliance Infrastructure (now taken over by Adani Transmission) failed to contract power through competitive bidding, depriving consumers of the benefits of competition.

A complete understanding of the recent trends requires a deeper exploration of the political forces historically driving this sector. The story of electricity development in Maharashtra is best characterised by state attempts to accommodate both industrial and agricultural interests. The latter had a dominant role in the state Congress party and the broader politics of the state. The development of cooperative sugar factories provided a strong institutional foundation for the ruling Congress and helped initiate early rural electrification in the state. The adoption of flat rate tariff for agriculture in 1977 benefited well-off farmers by reducing the input costs for cash-crops. The expansion of electricity to rural areas was a part of a virtuous cycle of reaping electoral gains by building institutional networks ─cooperative, educational and panchayati raj. This cycle was broken in the 1990s with the decline of cooperative institutions, factionalism within the Congress party and growing pro-urban bias within the Congress leadership.

The Congress government had also adopted early generation reforms by negotiating a deal with Enron, which proved controversial. This started an era of high-cost power in Maharashtra. The Shiv Sena-BJP government came to power for the first time in 1995. However, since the new government had enlisted many disgruntled Congress leaders, there was no discernible change in policy. Along with substantially increasing the electricity subsidy burden, the Enron project also constrained the public utility’s ability to add new capacity for nearly a decade (1995-2005).

The sector entered into a stage of stagnation thereafter with low capacity addition, high load-shedding and selective expansion. The newly established Maharashtra Electricity Regulatory Commission (MERC) and active civil society organizations (CSOs) tried to arrest this trend, but with little success. The state’s high economic growth pattern, however, enabled the state to continue cross-subsidizing agriculture. This ensured the stability of the Congress-Nationalist Congress Party rule for three successive terms (1999-2014). There were some attempts to direct the reform process proactively, mainly by bureaucrats. These included initiating internal reforms such as feeder separation and introducing transparency (under pressure from MERC and CSOs) as well as negotiating reasonable capacity addition deals. However, factors external to the sector (industrial growth slow-down and the centre’s RE push) hampered these initiatives. Consequently, the large capacity addition and ensuing demand shortfall led to the current situation of surplus power.

The political leadership has maintained a functional equilibrium in the state all these years by successfully managing the dominant interests through a combination of explicit and implicit subsidies (non-action in case of theft and arrears). The continued viability of this strategy is under threat from macro technological forces and changing federal policy. In this context, the mediatory role of the state assumes critical importance, mainly in resolving the issue of high-cost long term power purchase contracts and in incentivizing the bureaucratic machinery to play a developmental role.

Kalpana Dixit teaches political science at the Tata Institute of Social Sciences, Tuljapur. This research is based on work presented in full in the book Mapping Power, edited by Navroz K Dubash, Sunila S Kale, and Ranjit Bharvirkar.

Op-Eds in the Mapping Power Series:

• Reform is All About Getting the Politics Right
• How to Reform Uttar Pradesh’s Troubled Power Sector
• Consumers Upfront in Tale of Two Reforms in Andhra
• Taking Two Steps Forward, One Step Back
• Karnataka’s Power Politics
• AAP and the Politics of Power in Delhi
• The Story Behind Uttarakhand’s A+ Performing Discom
• Electricity Distribution in Gujarat: A Sustainable Energy Future Roadmap?
• Small Gains Behind Mounting Losses in Jharkhand
• Power Politics at Play
• The Saga of the Subsidy Trap in the Tamil Nadu Power Sector

More details about the Mapping Power Project can be accessed here.

A few months before the next general election, the Central government has proposed a set of changes to the Electricity Act 2003. The amendments seek to enable a market transformation in electricity. The link between political power and electrical power is widely known; promises around electricity access, price and quality are important political currency. However, the expenditure of scarce political capital on this issue is puzzling. The amendments will be hard to get through Parliament (an earlier 2014 effort failed) and voters will not see an immediate impact. What is the political rationality of this effort? Who are the winners or losers from these amendments?

Competition and choice

Bringing in competition and choice in supply for the final consumer has long been an aim of electricity reform and remains central to these amendments. The idea is that while a single public utility will run the wires through which electricity flows, multiple supply licensees (both public and private) will be allowed to compete for consumers. The intent is that the discipline of competing for customers will lead to improved supply and lower bills. However, the global track record on this approach is far from definitive.

While an earlier 2014 reform effort proposed mandatory and time-bound implementation of these reforms, and therefore was resisted by States, the current amendment allows them discretion on the timing of implementation. The combination of time discretion and the improved presence of the ruling coalition in State governments may facilitate passage this time around.

If it does, India could have an electricity distribution sector with pockets of competition for wealthy consumers in a sea of monopoly inhabited by the poorest. Private suppliers could cherry-pick profitable locations and consumers; the state-owned incumbent supplier will be left with the obligation to serve low-paying consumers.

This need not be bad, if there were a mechanism to support the second group. This currently happens through ‘cross-subsidy’ from wealthier customers, but this is also being changed under the amendments. This leaves only the possibility of direct support from States. If these transfers are not forthcoming, or late, the cash-starved incumbent supplier will be locked into a cycle of poor quality of service for its customers who have no ‘exit’ option, leading to more bill evasion, and further financial deterioration.

The amendment (along with changes in the National Tariff Policy) aims to get the price right — a long-standing aspiration — by capping cross-subsidies at 20% immediately, and eliminating them within three years. The cross-subsidy surcharge on open access customers — the fee that holds back customers from leaving the grid — would be eliminated within two years.

There is a compelling rationale for these changes — India has among the highest electricity tariffs for industry, which bears the burden of low-performance and losses among other consumers, impacting their global competitiveness. However, this shift could be highly disruptive if the profit-making side is allowed to flee, without devising a transition pathway for the loss-making side of electricity.

Perhaps because of these political sensitivities, the proposed approach to eliminating cross-subsidies is complicated. Subsidies will not be allowed across consumer categories like industry and agriculture, but will be allowed across consumption categories — big consumers can subsidise small ones. Big industrial consumers will see no effective change, although small business consumers will escape payment of subsidy.

The more significant change is abolition of the cross-subsidy surcharge, which will open the flood gates for large consumers to migrate through ‘open access’ to cheaper sources and avoid paying any subsidy. In short, cross-subsidy will become load-based subsidy, but the load available to pay that subsidy will be allowed to escape.

Where is support for poorer customers to come from? The amendment recognises the need to subsidise the poor, but mandates this be done through direct benefit transfers. However, identifying and targeting beneficiaries remains a challenge. Moreover, with these changes, the mechanism of support for poorer customers will shift from the electricity customer to the taxpayer. Cross-subsidies are certainly distorting. But the solution requires the electricity sector to assert its claims for support in competition with several other possible uses of state funds, introducing political uncertainty.

The proposed legislation makes subsidy to the poor the collective responsibility of the States and the Centre, which has so far been only the responsibility of each State. Notably, the Centre may have access to enhanced tax revenues from electricity because it stands to gain from additional tax revenue from profitable new wires companies and private suppliers. Thus, the Centre could become a new fulcrum of redistribution from wealthy areas in wealthy States, to needy customers that are concentrated in a few States.

While this may be a pragmatic fiscal strategy allowing redistribution across States, it also has undeniable political implications. It provides greater control to the Centre and limits the States’ and regional political parties’ capability to make electoral use of electricity pricing. The politics of power prices will shift from sub-national to national electoral politics. In an electoral context where the battle lines may be drawn between the ruling coalition and strong regional parties, this is worth noting.

Moreover, the amendments have other centralising dimensions. The amendment proposes a re-formulation of the selection committee for State regulators, from a majority of State representatives to a majority of Central representatives.

The Centre will also gain more oversight on capacity addition, through the requirement of detailed project report submission to the Central Electricity Authority. There is no doubt that State performance has been poor on both fronts. But the amendments reflect a clear choice of solution: re-direct responsibility to the Centre instead of fixing the process in the States.

Pump priming generation

Many generating companies have been in the news recently due to decreasing demand for their power and consequently their stranded assets. The amendments potentially provide comfort to them at the expense of distribution companies. Specifically, they mandate that suppliers sign power purchase agreements (PPAs) to meet the annual average demand, ostensibly to ensure 24×7 power for all, which will be subject to review and compliance measures.

The challenge of low demand for existing power is undoubtedly an issue. However, the logic of this move is curious; disincentives to serve poor customers rather than availability of power is the real obstacle to 24×7 power. The gain to generators could come at the cost of customers, who, through the PPAs signed by supply companies, have to ultimately bear the risk of uncertain load growth, prices and migration.

The amendments include many other provisions, notably around making the Act more up to date with regard to renewable energy, which is a worthy objective. In terms of the big questions, it places its bets on more competition, subsidy reform, a steering role for the Centre and throwing a lifeline to generators.

There is no doubt the status quo is unsatisfactory; India’s electricity sector remains beset with problems. Yet, the amendments leave quite unclear what happens to those left behind by distribution reforms and by efforts to help out generators. Disruptive change in Indian electricity may be needed, even inevitable. But the amendments risk placing the cost of disruption on the backs of the poorest, and shifts the potential for ameliorative measures to the hands of the Centre, rather than the States.

All three authors are affiliated with the Centre for Policy Research. Ashwini K Swain is a visiting fellow, Parth Bhatia is a Research Associate, and Navroz K Dubash is a Professor. This opinion piece was featured in The Hindu on Tuesday, October 9. The full article can be accessed here.

Op-Eds in the Mapping Power Series:

• Reform is All About Getting the Politics Right
• How to Reform Uttar Pradesh’s Troubled Power Sector
• Consumers Upfront in Tale of Two Reforms in Andhra
• Taking Two Steps Forward, One Step Back
• Karnataka’s Power Politics
• AAP and the Politics of Power in Delhi
• New Trends Demand New Strategies in Maharashtra
• The Story Behind Uttarakhand’s A+ Performing Discom
• Electricity Distribution in Gujarat: A Sustainable Energy Future Roadmap?
• Small Gains Behind Mounting Losses in Jharkhand
• The Saga of the Subsidy Trap in the Tamil Nadu Power Sector

More details about the Mapping Power Project can be accessed here. 

This year Uttarakhand’s state electricity distribution company (discom) was awarded an A+ by the Ministry of Power for its strong performance. This is an impressive achievement. Every year the Ministry of Power evaluates the financial and technical performance of India’s state discoms, giving each a rating between A+ and C. The Uttarakhand Power Corporation Limited (UPCL) was the only discom outside of Gujarat to secure an A+ rating. Only five of forty-one state discoms in India were given the top mark.

Uttarakhand’s power sector has undergone a remarkable transformation over the last two decades, to arrive at the position today where the state’s lone public discom is able to out-perform most of its peers around the country. At the root of this transformation have been two crucial elements: plentiful cheap hydro power coupled with rapid industrialisation in the state. Together these have been a golden combination for Uttarakhand. With cheap power and plentiful industry revenue, the UPCL has been able to improve its financial performance. This has happened even while the UPCL continues to report high commercial losses among non-industrial consumer groups.

When setting out as a newly formed state in 2000, Uttarakhand was under-developed, with low levels of industry and subpar electricity transmission infrastructure. Shortly after the state was formed, the UPCL’s industry users made up 21 percent of consumption, and the discom was reporting aggregate technical and commercial (AT&C) losses of 54 percent. The consumer mix and loss levels were akin to neighbouring Uttar Pradesh, from which Uttarakhand was carved-out. Yet while Uttar Pradesh has seen little change in its power sector situation in the years since, Uttarakhand’s power sector was soon to be on a path of transformation.

First, Uttarakhand had inherited a large amount of hydro power generation capacity. In 2003, the total energy available to Uttarakhand was 5,300 million units, while the state’s requirement was just 3,900 million units. In 2003, the newly set-up Uttarakhand Electricity Regulatory Commission (UERC) capitalised on this advantage, ordering a reduction in electricity tariffs. In its first tariff ruling, it significantly reduced the tariff that the UPCL had to pay the state’s hydro power generation company, which allowed it to then order the UPCL to reduce the tariffs that it charged to all consumer groups, except farmers. This firmly established Uttarakhand as a low tariff state, attractive for industry.

Second, in 2003 the Government of India launched an industrial policy for Uttarakhand and Himachal Pradesh, which included generous tax and central excise benefits to industry investing in the state. The policy was a huge success. Between 2000 and 2011, the number of factories in the state more than tripled. The result of this was that a favourable consumer mix was won for the UPCL. By 2011, industrial consumers contributed 63 percent of the UPCLs revenue, even while they only made up 1.1 per cent of its customers. Industry revenue is important, because industry users pay higher tariffs, cross-subsidising discom losses made supplying domestic and agricultural consumers at lower tariffs.

Plentiful cheap hydro power and a large revenue stream from industrial consumers transformed the position of the UPCL. In 2016-2017 the UPCL’s reported AT&C losses of just 16.28 percent. Power cuts in Uttarakhand are limited, universal electrification has been achieved, and the state government does not subsidise electricity tariffs.

Figure 1: Revenue Mix in 2016-17

The UPCL has been able to secure its A+ rating even as clear problems remain. Beyond industry consumers, AT&C losses associated with all other users in the state were 27 percent in 2016-2017. In seven distribution divisons, AT&C losses are in excess of 30 percent, including Roorkee where they are 36 percent. For years the UPCL has moved slowly to deal with these losses. Every year the UERC orders the discom to act on high levels of provisional billing, to replace mechanical meters and defective meters, and to claim outstanding arrears. Each year the UPCL makes little progress on these problems.

Having a state discom ranked A+ for its performance makes Uttarakhand an outlier state in terms of its power sector. Looking to the future, several road bumps lie in view. Rapid economic growth and industrialisation in the state has meant that electricity demand has risen fast. Yet there has been insufficient cheap hydro power capacity added to meet this demand. Instead, the UPCL is increasingly purchasing much more expensive gas-based generation. This is feeding through to higher tariffs. Coupled with this, central government incentives are now expiring which brought many industry players to the state. Industrial consumption over recent years has decreased marginally in Uttarakhand. The UERC puts this down to growing use of open access mechanisms that allow industry to buy power from generators outside the state, the installation of rooftop solar, and the effects of energy efficiency programs. If Uttarakhand fails on providing quality and reliable supply of power at competitive rates then industry consumption may fall further. In such a scenario, the UPCL’s performance is likely to suffer, and its A+ rating will be at risk.

Jonathan Balls is a New Generation Network (NGN) Post-Doctoral Scholar at the Australia India Institute, University of Melbourne, Australia. This research is based on work presented in full in the book Mapping Power, edited by Navroz K Dubash, Sunila S Kale, and Ranjit Bharvirkar.

Op-Eds in the Mapping Power Series:

• Reform is All About Getting the Politics Right
• How to Reform Uttar Pradesh’s Troubled Power Sector
• Consumers Upfront in Tale of Two Reforms in Andhra
• Taking Two Steps Forward, One Step Back
• Karnataka’s Power Politics
• AAP and the Politics of Power in Delhi
• New Trends Demand New Strategies in Maharashtra
• Electricity Distribution in Gujarat: A Sustainable Energy Future Roadmap?
• Small Gains Behind Mounting Losses in Jharkhand
• Power Politics at Play
• The Saga of the Subsidy Trap in the Tamil Nadu Power Sector

More details about the Mapping Power Project can be accessed here.

Mapping Power: The Political Economy of Electricity in India’s States, edited by Navroz K Dubash, Sunila S Kale and Ranjit Bharvirkar, provides the first comprehensive analysis of the politics of electricity distribution across fifteen Indian states. The book examines why, despite several decades of reform, India’s electricity sector remains marked by financial indebtedness and an inability to provide universal, high quality electricity for all. In chapters written by scholars of politics and electricity, the book traces the power sector in states as diverse as Andhra Pradesh, West Bengal, and Jharkhand. Through these state narratives, the authors argue that attempts to depoliticise electricity reforms are misplaced. Instead, they argue, successful electricity reforms in India depend on linkages with electoral gains.

The book was launched in September 2018 by Suresh Prabhu (former Union Minister of Commerce & Industry and Civil Aviation), Jairam Ramesh (Member of Parliament), Narendra Taneja (National Spokesperson, BJP), and Dr Pramod Deo (former Chairman, Central Electricity Regulatory Commission). Since then, it has been reviewed by:

• Ramesh Matham: ‘Mapping Power — The Political Economy of Electricity in India’s States’ review: Grid shortfall,’ The Hindu

“The 15 articles serve as a one-stop shop for information about the power sector’s tryst with politics and are quite interesting… In as much as it zooms-in into the relationship between politics and the power sector in fifteen big states, the book is timely and useful, because the Electricity Act is going nowhere.”

• Kaveri Iychettira: Volume 40, Number 4 of The Energy Journal (p. 260), IAEE’s Energy Economics Education Foundation

​“This book is an ambitious and substantial contribution to current day thinking on the challenges of India’s power sector. It is methodologically well-grounded in relevant theory and data… The focus on states contributes to bridging a crucial gap that exists in literature today, as most existing studies on India’s electricity sector address the country level. This work is a vital contribution towards not just informing India’s policy pathways, but also towards a methodological blueprint to understand the levers that drive electricity sector development across much of the developing world.”

• Ajay Shankar: ‘Politics in Power Sector Reforms,’ Business Standard

​“The editors have done commendable pioneering work in bringing the “political economy” to the centre of the analytical framework, which is an overdue course correction in the study of the electricity sector in India.”

The launch of Mapping Power was followed by a technical panel discussion with Professor D V Ramana (Professor, Xavier Institute of Management Bhubaneshwar), Aditi Phadnis (Political Editor, Business Standard), and Shantanu Dixit, the Group Coordinator of Prayas (Energy Group). Read more about the Mapping Power book discussion event hosted by the Centre for Policy Research and Oxford University Press here.

To learn more about the state-level politics of electricity in India, check out the Mapping Power blog series:

• Reform is All About Getting the Politics Right
• How to Reform Uttar Pradesh’s Troubled Power Sector
• Consumers Upfront in Tale of Two Reforms in Andhra
• Taking Two Steps Forward, One Step Back
• Karnataka’s Power Politics
• AAP and the Politics of Power in Delhi
• New Trends Demand New Strategies in Maharashtra
• The Story Behind Uttarakhand’s A+ Performing Discom
• Electricity Distribution in Gujarat: A Sustainable Energy Future Roadmap?
• Small Gains Behind Mounting Losses in Jharkhand
• The Saga of the Subsidy Trap in the Tamil Nadu Power Sector

Into the 1990s, West Bengal’s sultry summers meant interminable power cuts and fewer than one in five rural households had electric lighting. Today, by contrast, villages across the state are electrified and Bengal’s utilities boast a shelf of prestigious awards. Nonetheless, there are also dark clouds on the horizon as financial losses once again start to mount – thanks most recently to a 23% cut in electricity bills for this year’s Durga Puja displays.

West Bengal’s journey shows that escaping a low-level equilibrium in the power sector is possible, but sustaining a virtuous circle of payment and performance is often difficult. The temptation for political interference in the day-to-day operation of power utilities is ever present. Though the CPI(M) had governed West Bengal since 1977, its electricity record had been unimpressive. All this changed when the nominally socialist administration revised its economic strategy in order to court private investment. Reliable power would be a pillar of the new pro-industrial turn.

In the early 2000s, a team of senior bureaucrats and consultants began electricity reforms. Well aware of the failures of privatisation and deregulation in other states, they developed their own incremental reform path. Outside Kolkata, utilities remained under public ownership, but managers were granted greater autonomy. Officials hoped to further “reduce the human element” of corruption and inefficiency through computerisation and performance monitoring throughout the workforce. The ultimate goal was profitability, which would guarantee the utility’s independence.

This model looked surprisingly similar to another very different and more famous case: Gujarat. Both emphasised improved utility governance, technical solutions, and winning over employee unions. Both rejected outright privatisation and sought to minimise citizen participation in their electricity regulatory process. Together, these cases suggest that public sector reforms may offer a pragmatic alternative to controversial electricity liberalisation.
While popular opposition had stymied power reforms elsewhere in India, Bengali policymakers also benefitted from a series of favourable factors. Earlier, land redistribution meant that there was no powerful farmer lobby to block tariff hikes.

Like the BJP in Gujarat, the CPI(M) was able to call upon its political dominance and disciplined, centralised structure to manage dissent. The results were impressive. From losses of ~1,009 crore in 2001— more than a third of total expenditure — West Bengal was one of only three states with profitable utilities in 2011. Rural household electrification rose from 20.3% in 2001 to 98% today. Yet, as early as 2010, there were ominous signs that utility independence was under threat.

While the CPI(M)’s embrace of economic reforms had brought rewards in the electricity sector, state violence over land acquisition in Nandigram and Singur created a groundswell of popular discontent. Intensifying competition between the CPI(M) and Trinamool Congress, in turn, increased the temptation to meddle in the power sector in order to win votes. Combining quarterly billing data with satellite images of nighttime lights across West Bengal, a recent working paper by the economist Meera Mahadevan shows this politicisation at work. She finds that the new Trinamool government rewarded constituencies it narrowly won in 2011 with faster electrification and systematically lower bill collection. Billing data from these areas is full of suspiciously round numbers, she argues, suggesting it has been manipulated. Key posts in the electricity regulator were also left vacant, undermining its power of oversight, while tariff hikes were delayed.

Traces of utility independence nonetheless remain. The original reformers mobilised to ensure tariff rises in 2012. After the 2016 state elections, which Trinamool again won handsomely, tariffs were once again allowed to rise. The new government has also ushered in an impressive expansion of rural electricity access. As Lok Sabha elections approach, though, tariff hikes have been blocked despite increasing utility costs. Utilities therefore face mounting financial losses, threatening their ability to invest in the sector’s continuing growth. Eventually, consumers will pay the price.

Classic theories developed in the West suggest that democratic competition makes politicians more likely to deliver collective goods. West Bengal’s ambivalent trajectory— two step forwards and one step back— suggests instead that intensifying competition encourages short-term strategies that undermine the power sector’s longterm health. A similar pattern is visible even in wealthier states like Tamil Nadu and Punjab, where fierce partypolitical competition has driven the expansion of populist subsidies and spiralling utility debts. Conversely, oneparty dominance may give politicians the confidence to take unpopular decisions like cutting subsidies or cracking down on theft.

Today, the Trinamool regime looks dominant, its CPI(M) rival a spent force and the BJP still playing catch-up. Will the administration therefore decide to take a long-term view and end interference in the power sector? Previous experience suggests that this depends on how politicians perceive the likely risks and rewards. If consolidating electoral strength remains the key concern, as it seems presently, they will continue to reward new voters with cheap electricity and turn a blind eye to power theft.

If ensuring robust industrial and revenue growth becomes the priority, the long-term benefits of high-quality electricity may begin to outweigh the perils of short-term dissatisfaction. As citizens begin to expect 24/7 power in Kolkata and beyond, they may start holding politicians to this higher standard. In the longer term, then, popular pressure will become the guarantor rather than the enemy of a virtuous cycle in the power sector.

Elizabeth Chatterjee is a politics lecturer at Queen Mary University of London. This research is based on work presented in full in the book Mapping Power, edited by Navroz K Dubash, Sunila S Kale, and Ranjit Bharvirkar.

This article was published in the comment section of the Hindustan Times on 20 September 2018, and can be accessed here. 

Op-Eds in the Mapping Power Series:

• Reform is All About Getting the Politics Right
• How to Reform Uttar Pradesh’s Troubled Power Sector
• Consumers Upfront in Tale of Two Reforms in Andhra
• Karnataka’s Power Politics
• AAP and the Politics of Power in Delhi
• New Trends Demand New Strategies in Maharashtra
• The Story Behind Uttarakhand’s A+ Performing Discom
• Electricity Distribution in Gujarat: A Sustainable Energy Future Roadmap?
• Small Gains Behind Mounting Losses in Jharkhand
• Power Politics at Play
• The Saga of the Subsidy Trap in the Tamil Nadu Power Sector

More details about the Mapping Power Project can be accessed here.

By Zorawar Daulet Singh

The importance of India-China relations in India’s overall foreign policy cannot be overstated. Not only is China’s rise changing Asia’s geopolitical landscape and the global balance of power, its involvement in South Asia in recent years has augmented its position from being India’s largest neighbour to an engaged great power across the subcontinent. Unlike in the Cold War era, when a backward China had been confined to a limited role in South Asia’s security and economy, four decades of reform and opening up to the world have equipped the country with the financial wealth, industrial strength and military capacities to pursue, should it choose to do so, an ambitious role in South Asia.

Thus, India’s China policy choices are profoundly consequential for the Indian government. It entails opportunities as well as risks with implications across a gamut of issues such as India’s global status and effectiveness in international institutions, geopolitical security and economic transformation. The persistence of an unresolved border dispute in this context only reinforces the importance of crafting a sensible and effective China policy. As India’s foreign secretary told members of the Lok Sabha in February 2018, ‘We cannot see the relationship with China the way we perhaps saw it thirty years ago, or even 15 years ago … both countries share the belief that this relationship is slated to become one of the defining relationships of this century, certainly in our region…’¹ One of the areas that India’s China policy needs to focus on is the neighbourhood because it is the arena where India-China competition and mistrust have tended to be most acute in recent years. If not managed sensibly, it could undermine India’s interests and regional position, along with unravelling the prospects for cooperation on other important fronts.

The Policy Challenge 

For the past decade, India and China have been working according to rival geopolitical visions. Although China has been a direct neighbour of South Asia and India since 1950, it is only in the past decade that Chinese policymakers have reformulated their regional policy to pursue more sustained political and economic relationships with several states in the subcontinent and the Indian Ocean littoral. Following Xi Jinping’s foreign policy guidelines of 2013 and 2014, China has adopted a policy aimed at enhancing the development options of its neighbours as well as promoting new lines of communication or corridors with its southwestern periphery. Much of this impetus has been provided by the Belt & Road Initiative (BRI) – a grand connectivity plan that envisions a network of states economically linked to China through a variety of commercial-financial relationships and industrial projects. South Asia is one of five regions or subregions identified as areas to expand China’s geoeconomic footprint.

Since the 1990s, India too has contemplated ways to reconnect with its South Asian neighbours and inculcate a spirit of integration and interdependence in the subcontinent. While this process has found bipartisan political appeal, the ideas, resources and institutions to advance meaningful regional integration remain at a fragmentary level. Nothing underscores the meagre level of interdependence than the following stark statistics: merely 5% of South Asian trade is intra-regional; intra-regional investments constitute less than 1% of total investment in the subcontinent.

Although India and China are today seen as regional competitors, neither power has succeeded in implementing its vision fully. Arguably, the main reason has been the inability of both countries to situate their rival visions in a region-wide approach. India has not fully come to terms with the utter lack of intra-regional trading and infrastructure networks; nor has New Delhi been able to allocate adequate resources and capacities or adapt or renew institutions to match its aspirational rhetoric. Despite possessing far greater economic strength, and considering the scale and ambition of the BRI, China too has been unable to make a meaningful regional impact. Recent experience has proven that circumventing India – given its geopolitical centrality and market size – is not a viable path for any sustainable connectivity plan for the subcontinent.

Yet, unbridled competition poses grave risks for a fragmented subcontinent in the coming decades, a future that would undermine Indian interests far more than Chinese. Transforming South Asia must, therefore, be predicated on tapping India’s unique advantages: the size of its domestic market, which makes any geoeconomic plan’s success dependent on India’s participation and involvement, and the overt and subtle geopolitical influence the country continues to wield across the neighbourhood; it must also leverage China’s financial and industrial capabilities to construct infrastructure and connectivity capacities in the neighbourhood.

In short, both countries have strengths that are not being fully leveraged to advance an open subregional geoeconomic order. What has been missing from the policy discourse is an attempt to explore alternative futures and more constructive frameworks; there have been no attempts to visualize the changing regional setting in ways that would still secure vital Indian interests, advance stability and deepen regional economic development, while also enabling China to pursue its engagement with South Asia.

Intersection of Indian and Chinese Interests 

The first step in such an exercise would be to undertake a brief assessment of how Indian and Chinese interests interact in the region. What can we observe about China’s involvement in South Asia? China usually works with whatever regime is in power and avoids interfering in domestic political battles. Beijing’s main priority is protecting its economic investments. In some cases where China has deeper geostrategic interests, particularly in Pakistan and Myanmar, it has cushioned adverse reaction from the US towards these states. Hence, in limited ways, China is already a security provider – certainly at the political and diplomatic levels. And this factor shapes how many neighbourhood regimes now perceive China: as potential insurance against possible Western pressure and as a hedge against uncertainty about Indian positions in times of domestic crises in these states. There is little doubt that China’s engagement has improved the bargaining position of India’s neighbours vis-à-vis India and other major external powers.

India and China’s regional policies suggest that there are both overlapping features as well as geopolitical faultlines at play. Both neighbours have a common interest in (i) managing non-traditional threats such as terrorism, extremism, separatism and distress migration that impact regime stability of smaller South Asian states; (ii) promoting secular and stable regimes; (iii) promoting open sea lanes and ensuring the security of their maritime trade routes; and (iv) geoeconomically connecting South Asia with East Asia.

At the same time, there are some key differences in India and China’s regional approaches. First, China appears to be more interested in inter-regional interdependence and connectivity, while India is mainly interested in subregional integration. Put another way, China seeks to connect South Asia with China; while India seeks to bring South Asia closer from within as well as more connected with Eurasia and South East Asia. Second, there is a large measure of uncertainty about the geopolitical implications of the BRI in South Asia. India’s main concern is that deeper connectivity between India’s neighbours and China will reorient the foreign policies of South Asian states in ways that could eventually undermine Indian interests and challenge its claims to regional authority. More broadly, China’s engagement in South Asia might also adversely influence domestic politics in the subcontinent and strengthen anti-India political forces; the latter could spill over onto the domestic politics in India’s states, thereby impacting periphery security and social stability. Third, a major faultline would be the militarizing of China’s regional connectivity projects. Such a hypothetical scenario would pose military security challenges to India as well as place China in a position to act as a direct security provider in the subcontinent, an outcome that would have profound consequences for the geopolitics in the region.

Policy Recommendations 

One of the key geopolitical challenges for Asia over the next decade is whether and how a rising India and a rising China can learn to be sensitive to each other’s core interests while pursuing engagement with each other’s neighbours. In the April 2018 ‘informal summit’ in Wuhan, both political leaderships had sought to arrest the escalating tension and competition in the relationship. While their differences and disputes remain unresolved, both sides have come to recognize the costs and disadvantages of a semi-hostile and contentious relationship. In particular, building trust and ‘strategic communication’ in the neighbourhood have now been recognized by both leaderships as shared policy goals.

1. Capacity building and assisting weak states: Although India and China have a common interest in regime stability, both sides have yet to explore structured cooperation on this front. One form such cooperation could assume is joint assistance of weak states through coordinated capacity enhancing projects and training programmes. Indeed, the April 2018 talks have laid a framework for ‘India-China plus one’, that is, India-China cooperation in third countries in the region.² In October 2018, India and China launched a programme to train Afghan diplomats as an initial step in a long-term effort for trilateral cooperation (India-China-Afghanistan).³ This confidence-building measure, albeit modest, has opened a window for precisely the type of coordination between two regional powers that has often been ambivalent of their shared interests. Such third-party cooperation should be extended to other states confronting domestic challenges; for example, the two nations could together support Bangladesh’s secular forces in their struggle against extremism or assist Myanmar in responsibly managing domestic order.

2. Coordinating geoeconomic plans: Lacking in finance capital and industrial resources, India cannot undertake the sole burden of lifting South Asia from underdevelopment and low interdependence, especially given the growing domestic claims within the country itself. If Indian requirements in the subcontinent are to advance connectivity (both within and between South Asian states) and deepen the developmental process, China’s engagement can be nudged or leveraged in directions that also advance India’s long-term interests. Building constructive regional partnerships are unavoidable and China is one of the key players that need to be engaged more strategically by India.

Can China’s infrastructure projects increase South Asia’s internal connectivity and economic interdependence? Much of the viability of logistical networks and energy projects is linked with India’s economy and access to its large market. For example, hydropower projects developed by China with India as the main eventual market could be a form of trilateral cooperation. Another instance is China’s construction of a new terminal at the Chittagong port in Bangladesh, which complemented India-Bangladesh coastal shipping cooperation.⁴ Similarly, projects like the BCIM (Bangladesh-China-India-Myanmar) corridor could reconcile India’s vision to deepen connectivity with its smaller neighbours with China’s vision to connect its southwestern provinces with South Asia.

More broadly, India-China geoeconomic coordination and cooperation, including through joint bilateral and multilateral projects, is necessary to avoid duplicating large infrastructure projects that could otherwise burden the region with excess supply-side capacities and fiscal burdens. India’s official position on the BRI (beyond the China-Pakistan Economic Corridor that contradicts India’s sovereignty over Jammu and Kashmir) is based on legitimate questions around sustainability, viability, transparency and industrial benefits to the local communities of some of China’s economic projects. India-China coordination in third countries could help in addressing these issues by giving India a say in the choice and design of projects, along with making China’s economic involvement more in sync with the subregional political economy as well as with established international norms. The second BRI forum held in Beijing in April 2019 indicates Chinese leaders might be responding to the critique from India and other countries. The communiqué called for ‘extensive consultation’; ‘green’, ‘people-centred and sustainable development’; and ‘high-quality, sustainable infrastructure’ that is ‘inclusive and broadly beneficial’.⁵ But for India to explore whether the BRI’s adaptation does genuinely augur a consultative and sustainable geoeconomic approach by China in the subcontinent, its own position on the initiative needs to evolve such that its legitimate sovereignty concerns do not constrain the formulation of a more sophisticated policy.

3. Maritime cooperation: In recent years, India has recognized China’s ‘Malacca dilemma’ – a reference to the long and insecure lines of communication through the northern Indian Ocean that China relies upon for much of its international trade – and its corresponding interest in improving the security of its Indian Ocean trade routes. China, for its part, too needs to reassure India on its port projects and the military aspects of its regional involvement, particularly in the South Asian littoral. Even as they recognize some of China’s maritime security concerns, Indian policymakers must be prepared to counteract any attempts at militarization or conversion of Chinese infrastructure investments in South Asia into forward-basing facilities for the Chinese military. A failure to do so might impel other great powers to respond to China with their own military bases on the subcontinent’s maritime periphery, a process that would pose adverse consequences for regional geopolitics and also erode India’s influence in the neighbourhood.

Competitive Coexistence in a Common Neighbourhood

India and China’s policies are beginning to resemble each other. Just as Beijing’s engagement with India’s neighbours increases the status and bargaining position of these smaller states vis-à-vis India, New Delhi too engages with many South East Asian states who seek to hedge their dependence on China by developing more economic and geopolitical options. Yet, neither side is under any delusion that India’s neighbours can be rallied against India or that India can rally South East Asian states to balance Chinese power. The balance of power simply would not allow such a thing in practice. The defence budget of the entire South East Asian region is about $45 billion. China’s is four times that figure and with far more modernized and balanced capabilities. Similarly, the asymmetry between India and its neighbours is even higher. In South Asia – with the exception of Pakistan – none of the other states are in any position to present a threat or challenge to India, even with outside assistance. This proposition is likely to be even truer over the course of the next five years.

If we look at the official rhetoric from the region, what stands out is a similar discourse being espoused by most of the smaller South Asian states. Nearly all of India’s neighbours have expressed a preference for (i) non-alignment or strategic autonomy as a guiding principle in their foreign relations; (ii) multi-directional economic engagement with India, China, the US, Japan and other powers; and (iii) sensitivity towards India including publicly disavowing any move towards offering military facilities or bases to external powers and thus reassuring India on its vital interests. As one recent study observed, smaller South Asian countries ‘largely still see India as the dominant power in South Asia, suggesting that Chinese economic activity, while welcome, will not necessarily translate into major military or strategic gains’.⁶ Another discernible trend is that neither India nor China seems to be pressuring or cajoling smaller South Asian states to make hard choices, or persuading these states to adopt postures and policies that run contrary to the main interests of its regional competitor.

In short, we do not see a Cold War-style competition, which suggests some sort of a tacit acceptance of competitive coexistence in their overlapping peripheries. So while India and China are competing they are doing so within a framework of self-restraint. This could gradually pave the way for a conception of a regional order with informal norms on the ‘rules of the game’ in the subcontinent. Other things being equal, internally resilient and economically vibrant neighbours are likely to be in both India and China’s interests. If stability in their overlapping peripheries is a common interest, it should pave the way for more sustained bilateral conversations to mitigate some of the uncertainty-induced competition and mistrust; these could also seek to proactively exploit the untapped overlapping interests likely to be emanating from China’s growing involvement in South Asia.

Far-sighted and pragmatic voices in the West are advocating for ‘stable competition’ or ‘responsible competition’ with a rising China to avoid precipitating a second and costly Cold War. Indian policymakers must take the long view and pursue an approach of peaceful competition in the neighbourhood. India and China need to engage in a strategic conversation on the subcontinent and its various parts towards coordinating some of their regional connectivity visions and policies. The failure to pursue such a dialogue, and to arrive an understanding on an agreed framework for Indian and Chinese policies, would constitute a recipe for regional instability and a costly zero-sum rivalry that neither country can afford in a rapidly changing international environment.

Other pieces as part of CPR’s policy document, ‘Policy Challenges – 2019-2024’ can be accessed below:

• The Future is Federal: Why Indian Foreign Policy Needs to Leverage its Border States by Nimmi Kurian
• Rethinking India’s Approach to International and Domestic Climate Policy by Navroz K Dubash and Lavanya Rajamani
• India’s Foreign Policy in an Uncertain World by Shyam Saran
• Need for a Comprehensive National Security Strategy by Shyam Saran
• A Clarion Call for Just Jobs: Addressing the Nation’s Employment Crisis by Sabina Dewan
• Time for Disruptive Foreign and National Security Policies by Bharat Karnad
• Multiply Urban ‘Growth Engines’, Encourage Migration to Reboot Economy by Mukta Naik
• Schooling is not Learning by Yamini Aiyar
• Clearing Our Air of Pollution: A Road Map for the Next Five Years by Santosh Harish, Shibani Ghosh and Navroz K Dubash
• Protecting Water while Providing Water to All: Need for Enabling Legislations by Philippe Cullet
• Interstate River Water Governance: Shift focus from conflict resolution to enabling cooperation by Srinivas Chokkakula

¹ Ministry of External Affairs, ‘Sino-India relations including Doklam, border situation and cooperation in international organizations’, Sixteenth Lok Sabha, 4 September 2018, 2-3.
² After the Wuhan meetings, Chinese Vice Foreign Minister Kong Xuanyou had briefed the media on such trilateral cooperation: ‘The two sides will enhance policy coordination in their neighbourhood to discuss cooperation in the form of China India plus one or China India plus X.’ ‘Modi-Xi summit: India, China to step up policy coordination’, PTI, 29 April 2018.
³ ‘India, China launch joint training for Afghanistan, plan more projects’, Reuters,15 October 2018. https://www.reuters.com/article/us-india-china-afghanistan/india-china-l….
⁴ Nilanthi Samaranayake, ‘China’s Engagement with Smaller South Asian Countries’, Special Report No. 446, April (Washington, DC: United States Institute of Peace, 2019), 13.
⁵ Joint Communique of the Leaders’ Roundtable of the 2nd Belt and Road Forum for International Cooperation, 27 April 2019. https://eng.yidaiyilu.gov.cn/qwyw/rdxw/88230.htm.
⁶ Samaranayake, ‘China’s Engagement with Smaller South Asian Countries’, 3-4.

Read the full working paper produced by the CPR-Namati Environmental Justice Program on the dilutions made to the central law of Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, over a period of two years.

Even though the fate of the amendments brought to the Act by the National Democratic Alliance (NDA) government, through a series of ordinances, currently rests with the Joint Parliamentary Committee report, several states have already brought about changes through Rules under Section 109 of the Act.

This paper attempts to trace and analyse how the state governments have modified and built upon the central Act, and especially at how they have diluted the applicability of progressive clauses like consent, Social Impact Assessment (SIA), food security provisions, clear compensation related provisions, as well as clauses which allow for unused land to be returned to original owners.

Listen to the full audio (above) of the talk by  Kumar Sambhav Shrivastava, Ankur Paliwal, and Bhasker Tripathy, where they present an analysis of 331 ongoing land conflicts in India which affect close to 36 lakh people and span over 10 lakhs hectares of land.

In this presentation, they address how, why, and where these conflicts are emerging and what are the implications of these conflicts for local communities and investment policies in India.

Kumar Sambhav Shrivastava writes on issues at the intersection of human rights, environment, industry and politics; Ankur Paliwal divides his time between coordinating Land Conflict Watch, and exploring stories about science, global health, gender and the environment;  Bhasker Tripathy covers and writes on the issues of rural development, agriculture, migration, women empowerment, and renewable energy.

In 2013, a young political party, the Aam Aadmi Party (AAP), led by Arvind Kejriwal, charted a course to one of the most significant electoral upsets in Indian political history. A substantial plank of AAP’s successful election campaigns in 2013 and 2015, as seen in its manifesto, is the emphasis on making electricity and water affordable to the common man. Interestingly, power sector reforms had been key to sustained electoral victories by Kejriwal’s predecessor, Sheila Dixit of the Congress Party, over the three previous legislative assembly elections as well. During Dixit’s period in power from 1998-2013, the focus was on improving the quality of power supply in Delhi through privatisation of the electricity distribution sector. AAP’s election campaign questioned the success of this privatisation model by alleging financial irregularities by distribution companies (discoms) as well as collusion between the Congress government and the discoms to keep tariffs artificially high.

Since coming to power in 2014, the AAP has sought to translate its political vision of affordable basic needs into reality in at least two ways. First, the AAP provided a flat 50% subsidy on power consumption below 400 units for domestic consumers. While consistent with its political agenda, the subsidy has been criticized on a few grounds.  In particular, the power subsidy is so broad-based that, on an average, over 80% of Delhi homes benefit from it. Moreover, as a Brookings India study notes, given that the upper limit of 400 units is quite high, wealthier households consuming more power receive more in subsidy than do poorer households. In May 2018, the subsidy scheme was revised to steer greater subsidy toward lower consuming, and therefore, presumably less affluent households, by offering an additional subsidy of Rs 100 for consumers with a monthly consumption under 100 units. However, concerns regarding benefits being claimed by middle and high income households persist.

The subsidy scheme also throws up new challenges to management of discoms. Since the subsidy is paid by the government, any delays in transfers to the discoms has a cascading effect on the sector, as the discoms also delay payment to generating companies, resulting in an additional financial burden of late payment charges. In the absence of a significant tariff hike since 2014, the additional consideration of delayed subsidy payments from the government could adversely impact the discoms’ financial health.

A second consumer-friendly move spearheaded by AAP is the proposed imposition of penalties on discoms for unscheduled power outages. This effort has run afoul of the larger political context in Delhi, one shaped by a struggle for authority between the elected government and the Lieutenant Governor (LG).  AAP had originally mooted this idea in 2015 but the Delhi High Court had struck down the scheme as it had not been approved by the LG. Earlier this year, the LG approved this scheme, however, it will come into effect only upon notification by the state regulatory agency – the Delhi Electricity Regulatory Commission (DERC). This would require an amendment to the existing DERC (Supply Code and Performance Standards) Regulations, 2017, which already sets out timelines for resolution and compensation payable to consumers by discoms on account of various defaults including meter complaints and power supply failure. While the government has proposed a penalty of Rs 50 per hour for the first two hours and Rs. 100 for each subsequent hour of unscheduled power outage, payable by discoms to consumers, the existing DERC regulations are more nuanced as they account for seven categories of power supply failures and a differential timeline for resolution of defaults, ranging from two to twelve hours, within certain categories depending upon the percentage of the aggregate technical and commercial losses in a particular zone. Therefore, it is unclear if the government’s scheme is in fact an improvement on the existing regulations.

The AAP’s moves in the Delhi electricity sector illustrate the challenges of implementing a political vision in the sector without crossing over into pure populist policies that also undermine the financial health of the sector. For instance, the government needs to consider the scope of the existing electricity subsidy – who are the intended beneficiaries? In what way can the scheme be targeted to ensure that benefits are passed on only to the intended beneficiaries? In the context of the proposal to impose penalties on discoms for power outages, the government should be cognisant of stepping into a purely regulatory sphere and answer why changes to the existing regulations are required to begin with. Further, in both schemes, consumer interests are at the forefront but allaying concerns of the distribution companies is key to long term sectoral sustainability.

In Delhi, while issues in the power sector have resonated with the electorate and their concerns have been amplified by political parties, finding the balance between political goals, financial viability and institutional constraints continues to be a challenge.

Megha Kaladharan is a lawyer working on regulatory and policy challenges in the Indian electricity sector at Trilegal, an Indian law firm. This research is based on work presented in full in the book Mapping Power, edited by Navroz K Dubash, Sunila S Kale, and Ranjit Bharvirkar.

Op-Eds in the Mapping Power Series

• Reform is All About Getting the Politics Right
• How to Reform Uttar Pradesh’s Troubled Power Sector
• Consumers Upfront in Tale of Two Reforms in Andhra
• Taking Two Steps Forward, One Step Back
• Karnataka’s Power Politics
• New Trends Demand New Strategies in Maharashtra
• The Story Behind Uttarakhand’s A+ Performing Discom
• Electricity Distribution in Gujarat: A Sustainable Energy Future Roadmap?
• Small Gains Behind Mounting Losses in Jharkhand
• Power Politics at Play
• The Saga of the Subsidy Trap in the Tamil Nadu Power Sector

More details about the Mapping Power Project can be accessed here.

Even as the Joint Parliamentary Committee’s report on the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (RFCTLARR) is awaited, several states have already brought about changes that severely compromise the scope of clauses related to consent, Social Impact Assessment (SIA), food security and higher compensations. These changes also restrict the applicability of the 2013 law at state level.

States have executed these changes through Rules under Section 109 of the Act, or have enacted their own state level land acquisition legislations using Article 254(2) of the Constitution of India. States, which have exercised the latter option, have managed to override the provisions of the central law. In the present case this has meant doing away with the provisions of consent and Social Impact Assessment.

While ‘land’ is the subject matter of the State list, the ‘acquisition and requisitioning of property’ finds place in the Concurrent list of the Constitution. This implies that both the central and state governments have jurisdiction over the same. In such cases, state level rules need to be within the binds of the central law; as in the case of the RFCLARR, 2013. However, Article 254(2) allows for instances for states to override the central legislations provided they receive presidential assent.

The year 2013 saw the enactment of the RFCTLARR replacing the colonial 1894 law on land acquisition. This new law introduced several critical requirements such as SIA, consent from land-owners, increased rates of compensation, provisions related to return of unused lands and food security.

Several of these provisions would have been repealed had the amendments proposed in the Bhartiya Janata Party’s RFCTLARR Ordinance, 2014, been accepted. In response to mass scale protests by farmer’s organisations, political parties and objections by NGOs and researchers, Prime Minister Narendra Modi announced that the government would not be pursuing these amendments. However, in the last three years several dilutions proposed in the Ordinance have found their way into state laws and Rules.

An examination of these legal changes reveals the following trends:

• At least six state governments have enacted their own land acquisition laws by seeking Presidential consent using Article 254 (2) of the constitution. This is based on suggestions of the NITI Ayog in 2015.
• These new state laws like the RFCTLARR (Gujarat Amendment) Act, 2016 directly adopt the amendments proposed by the 2014 land ordinance. With this the Gujarat state law manages to dispense the requirements for consent and SIA for a range of projects, including industrial corridors, infrastructure or those projects important for national interest, as was proposed in the Land Ordinance.

• States are also adopting the clauses of the NDA government’s 2014 land ordinance through the drafting of state rules, thereby attempting to ‘amend’ the central law. This is being done by dispensing with the requirement of specific processes or restricting the scope of the law. For instance, the process of conducting an SIA under the Uttar Pradesh Rules is much less comprehensive than the 2014 Central Rules.
• State level rules are diluting the applicability of progressive clauses like prior consent, public hearings or SIAs. In Jharkhand, the state rules reduce the quorum of the Gram Sabha consent to one-third from half as required in the central law.
• States are repatriating unused acquired land into land banks rather than returning it to the original owners as required by the central law. This is being done by Odisha and Jharkhand. The Tamil Nadu law allows unused land to be taken for any other purpose, provided the District Collector certifies the same.
• State Rules are reducing the amount of compensations to be paid against acquisitions. In states like Haryana, Chhattisgarh and Tripura, the multiplying factor for rural land is fixed at 1.00 as against 2.00 as specified in the central law.

A full table on these dilutions is also available in the occasional paper.

The CPR-Namati Environmental Justice Program had carried out a preliminary mapping of the dilutions and exclusions in a working paper in August 2016 (see here). The team has now updated this analysis to include several new developments.

Even though the Land Ordinance was not pursued, its provisions have already found their way in state level land acquisition processes. The final paper is available here and its executive summary here.

Hindi translation of this paper is available here.