Dan Banik and Elizabeth Chatterjee discuss India's achievements in extending electricity coverage, recent reforms in the power sector and the role of public-private partnerships, the country's heavy dependence on coal and whether renewable energy is going to be enough to meet its future energy needs.
Dr. Elizabeth Chatterjee is an assistant professor of environmental history at the University of Chicago. Her research explores how non-Western energy histories disrupt conventional understandings of capitalist development, the social dynamics of climate change, and green political thought.
Banik Great to have you on the show Liz. Welcome.
Chatterjee I am so delighted to be here. Thank you so much for having me.
Banik I was recently reading, looking at the data, reading the state of electricity access in India, and I was quite astonished that almost 98% of Indian households are connected to the grid. For me, that was astonishing because I recall my childhood in the 70s and 80s, I recall voltage stabilises and the power cuts and the load shedding. It was like a routine thing, every evening, during the summer the fans stopped working, you were watching a tv program, watching cricket, and suddenly it was darkness and it’s difficult to imagine how things were then when I visit India as often as I do. I should say I haven’t visited India for the last three years, because of COVID, but what amazes me is that all of this increased use of air conditioners and fridges has sky rocked in recent years. But at least in the big cities power cuts appear to be a thing of the past. So, before we discuss some of the challenges, what has actually worked? What has India done well in terms of promoting electricity coverage?
Chatterjee Yeah, I mean I think it is an astonishing achievement as you say, since the turn of the millennium, half a billion Indians have gained access to electricity, which is, I think, one of the greatest achievements in the entire human history of rural electrification. So, that is an enormous success story and both the present government and the previous one must take a lot of credit for pushing that forward. Underlying that as well is the enormous expansion in the amount of capacity in India, so, the actual installed generation capacity and the number of power plants has quadrupled, again since the turn of the millennium, which is pretty astonishing, although I am sure we will talk about the environmental side effects of that. Also, we have seen a huge surge of private investment coming in, almost half of that capacity now is privately owned for the first time. These are all success stories, and I would also add the completion of the national grid, something that is not super sexy, but has been really crucial in actually raising up the level of some states that were previous laggers. Now, of course we can question each aspect of these. The real question marks about financial stability, about environmental stability and about the underlying data, plenty of people would point out, that lots of those households don’t have 24/7 power by any means and that many people struggle to pay. So, there are questions around that figure, the government does like to trump it 100% which does seem a tiny bit questionable. But these are all enormous achievements, both the spread of coverage, the sheer scale of resource capacity, the completion of the grid and something else I am sure we will go onto talk about, particular achievements in the area of renewable electricity as well.
Banik You know I am thinking about all those years ago when I did field work in West Bengal, in Orissa, and I spoke with district development officials, it could be villages, local politicians, and the idea of development was often articulated in two ways; one was roads, and the other was electricity. So, before we talk about maybe some of the reforms that India has undertaken, at least that the Indian states have undertaken, I wonder whether this idea of development as being directly related with electricity access, if that you think, has helped Indian politicians to somehow push through reforms to somehow be more committed than perhaps in other parts of the world?
Chatterjee It is a good question, the Association of Electricity Access for Development is actually a really old one, so for example, Indian nationalists like Meghna Saha, the great Bengali astrophysicist, came up in the 1930s and 1940s with all sorts of scale showing India and then China were at the very back of the world in terms of consumption per head of electricity, and we see this across the political spectrum early on and yet not terribly much happened for decades and decades in terms of rural electrification. So, I am not sure it is that there is something new about the equation with electricity and development, I think what has become really apparent is that infrastructure and infrastructural bottle necks were seen as really key and hindering Indian industrialisation. I think it is actually often been the need to improve power for industrial users and urban users as much as to spread it around more generally that has really driven some of these big pushes forward. Rural electrification has lagged some of those other achievements, I am very glad now it has caught up. But one of the curious things that you haven’t seen in India historically, is mobilisation by people who don’t have access to the grid usually to get access to it.
Banik Are you talking about movements or protests for electricity? Is that what you are referring to?
Chatterjee Right, right. So, there is a rich culture of electricity protests, but it tends to be by people who are wanting to pay less or wanting better quality for the power they do have, or who have had access to the grid and then equipment has failed. It has less been a popular mobilisation to demand access by people who have been left out of the grid, which in and of itself is quite interesting. But you know, with the big welfare schemes brought in by the previous congress led United Progressive Alliance Government, we saw a big emphasises on rural electrification, lots of funding going to the states, and that has been supercharged by the government. I do think though that often the arguments have been about economic productivity rather than some great faith in the real glory in brining power to everyone.
Banik My take on this is, at least in recent years, it is almost like everybody expects electricity. You know, it’s like the politician can’t really talk about himself or herself as the saviour bringing electricity because it is almost taken for given, it is a necessity, which is very different from say another country which I do a lot of work in, Malawi, where just getting access to the grid is a challenge, even if you do have 10% of the population connected to the grid, these people won’t have 24 hours of electricity, maybe if you're lucky enough to get 8 or 9 hours. So, my sense is, in India it is almost taken for granted, it is not a big deal.
Chatterjee Yeah, it is very interesting you say this, because I heard a lot of electricity officials actually complain about it, about this kind of hedonic treadmill of access to electricity. So, often people will get electricity and it will be only for 10 hours a day and within about 3 or 5 years they will say this isn’t good enough, we want consistent voltage, we want it round the clock, and this is a real, genuine, well documented phenomenon, that you start expecting more and then just as you say, you start taking it for granted, the goal posts keep moving as these bureaucrats would complain: they didn’t even have a connection before, okay the connection is shoddy but now they are complaining about it, they are complaining about paying too much. As a side on that, I think that one of the really interesting phenomena that this expansion of the grid has brought about has been the death of micro grids in lots of areas, so the old off grid tiny scale, say solar power solutions that you saw for example in the Sundarbans the beautiful mangrove forests off Bengal, they have been driven out because people say the real power of the grid, it is not enough to be able to charge say a phone or run a single light bulb, as you say, you do want goods like an air conditioner, maybe that’s if you’re a bit more middle class, but a fridge or a tv that you can watch without thinking half way through your 4 hour long Bollywood film it’s going to run out of battery. So, this is an interesting phenomenon that actually some of those old renewable energy solutions have taken the hit too because they are seen as the poor man’s power, whereas the grid is the real deal.
Banik That is fascinating. So, you know, one of my first proper gifts to my parents when I returned to India, this is the early 1990s, was to buy an inverter, a battery powered back up system so every time there was a load shedding, four celling fans and a TV and some lights in the house could be run for several hours. This system has been working quite well for several decades, we haven’t changed, I suppose they have changed the batteries every now and then but now my dad was telling me recently that they don’t use it anymore, so he is worried the system won’t work when a load shedding does take place, so one is getting quite comfortable with how stable the system is. But returning to this post 1991 phase, Liz, that you have written about, the Indian state’s activities have changed considerably since 1991 and there was perhaps an acceptance that a state dominated system was not working and that one needed to involve private sector actors about how there has been this hybrid public private system, and some reforms have apparently worked and some have not, some agencies have perhaps become more efficient while other parts of India’s power sector remains quite dysfunctional. What would you say has worked in terms of this public private partnership? How effective has that been so far?
Chatterjee That is a great and a very big question. Here, I think the lens of electricity does give us a bit of a different perspective on India’s trajectory to more conventional focuses on other industrial sectors for example. Because I think what we see is in some ways the real high noon of liberalisation, were in the years from 1991 through to 2003 when a very sweeping electricity act was passed, that would have brought in a much more competitive market system except everyone on the ground basically ignored it and it has been, in some ways, some of its key provisions have been a dead letter. Instead, we have seen, I would say, a real combination, as you summarise it there, of the private sector being grafted in alongside continued very pervasive state activity. So, in the power sector we often talk about generation, that is the power plant side of things and there, like I said, half of all generation today is owned by private players and that is really where private activity has been concentrated. On the other side, you have distribution, that is the low voltage transmission of power to end users like you and me and you know your mum and pop businesses and this kind of thing, and there it is very much state-owned utilities that continue to dominate and many of them are suffering under the burden of a very heavily politicised setting of the tariffs for power and the kind of financially crippled. We've got private players on one end making sometimes some money, we can return to that, but this fundamental distribution segment is very difficult to make profitable, it is very tied up with politics and private sector actors haven’t really wanted to touch it outside some of the big cities.
Banik So, is the problem there Liz that the private sector is not invited to be part of the distribution system? Is it because it is mired in politics, you want to be seen as the provider, taking all the credit? Or is it because the private sector feels it is untouchable, this area is so controversial that it is better to just produce rather than distribute?
Chatterjee So, I think it is largely the latter. This is known to be a very densely politicised sector, whereas you can imagine it is really politically difficult to raise tariffs on say residential consumers who are pretty good at mobilising, often the urban middle classes, and most famously, rich farmers who get flat rate or nearly free electricity in quite a few states, often they used to then pump water in huge quantities to irrigate crops that they should probably not be growing in arid areas and again it is politically very difficult to raise tariffs on those groups. Because this is seen then as such a politically sticky wicket, many private players have not wanted to get involved unless it is on very particular terms. I mean and in this as well they are also looking at historical experience of players that have got into, for example, distribution in Orissa, the poor eastern state, and their attempt at privatisation went really disastrously wrong in the 1990s, everybody felt pretty burned. There are a few exceptions, Delhi is very notable that it is privatised, and of course privatised utilities survive in your hometown of Calcutta, and Mumbai and so on, but it is seen as a very dangerous sector to get involved with. There are some sort of franchises but the private sector tends to be quite shielded from the risk of actually setting those tariffs. We should also talk about the private sector’s involvement in building all of these new power plants which the state has shepherded in over 20 years and has also gone, in some ways, very wrong, even while it has been able to install huge amounts of capacity. India, if you like, has been in a long slow burning economic crisis for a decade and I think that the power sector is really at the heart of that.
Banik In terms of say current and future energy needs, India has a lot of potential but there are also challenges. So, India is apparently the fourth largest energy consumer in the world behind, China, the US, and the EU and I was recently reading the India Energy Outlook for 2021, this report that was realised by the International Energy Agency, IEA, in February of this year. According to that report, India in the next few decades or so, will actually have the biggest share of energy demand growth which at around 25% will overtake the EU as the world's third biggest energy consumer by 2030. By 2040, according to this report, India will actually double its energy consumption as the GDP grows it also turns out that although the pandemic has slowed down energy demand in this country. India’s dependence on oil and coal is actually supposed to increase sharply in the next few years and you know I am interested in renewable energy, and I know there is a lot of attention on renewable energy in India, but what I find intriguing is a lot of analysts say that renewable energy is not going to be enough to meet India’s energy needs. There have been all kinds of government policies, there have been ambitious policies, but apparently oil and gas production has been stagnant for years, which also means India will be reliant on fossil fuel imports from other parts of the world to meet its energy requirements. So, that was a bit of a longish introduction to my question Liz, I am trying to get your take on current and future sources of energy in India, where do you think India is heading? Because on the one hand there is growing talk about renewable energy but on the other hand, the reality appears to be much more reliance on fossil fuels.
Chatterjee Yeah, I mean, this is a balance that the government of India has been quite up front about, that they envisage both the fossil fuel side and the renewable side continuing to grow in tandem. I am setting aside the current debate about should India put forward a net zero target, which might change some of those calculations, but really this has been pretty explicit that India believes it has a right to develop oil, gas, and coal alongside renewables. In terms of renewable energy there is a lot of good news that has come out of India, I mean there are these very eye-catching targets for 175 gigawatts of renewable energy by 2022, and 450 gigawatts by 2030, which is just absolutely enormous, that’s more than the entire installed capacity at the moment. Those targets will most likely not be met, certainly not next years, but there has been a huge amount of investment in solar and in wind, India is now the third largest solar market for example, behind China and the US. So, these are all great signs, I mean if you talk to people involved in the renewable energy sector, they will say there are huge dark clouds on the horizon as well, they complain a lot about the government's volatility about setting policy. For example, this enormous set of targets, a big round number, 100 gigawatts solar that is targeted for next year has meant that India has become increasingly dependent on imports of solar components from China, the government then blatantly became very uncomfortable with this and was trying to encourage domestic manufacturing in ways that have unsettled all the of players in the sectors. Plus, there are all these big problems I have talked about, the politicised tariffs that mean your biggest consumers, your monopsonist state owned utilities are not good at paying their bills on time and there is the fact that India’s economic growth has been not great, long before COVID, since about 2012. So, all of these are dark clouds on the solar and wind horizons, but there is a lot of good news there, India really is a big solar player. On the other side though, yes there is an enormous dependence especially in the power sector, on coal and that looks pretty likely to stay for a whole number of reasons; lots of the coal plants are quite old that means because they are amortised they produce power very quickly, huge amounts of the east in the coal belt, the huge state owned Coal India which is the largest coal miner in the world employs vast numbers of people, both directly and indirectly and historically has provided lots of welfare to those areas. These are not areas where you get a lot of wind, they are not areas that are necessarily that sunny with spare land for solar. So, what is going to happen to those regional economies is a big question. Then, I think something that people have not paid too much attention to but that is really important, oil, gas and coal revenues are the big patch in both the central government and lots of state government budgets. So, perhaps as much as a quarter of New Delhi’s budget is based on its oil and gas taxes. Lots of those eastern states really rely on coal revenue as well. Again, what is going to fill those gaps? So there are actually very powerful forces holding coal, oil and gas in the mix. You can see this, you know, the prime ministers independence day speech just ten days ago really played up one side climate goals, talked about India setting up the International Solar Alliance which it is very proud of, that it is going to go to green hydrogen and on and on, but it also said that we envisage an energy independent, gas based economy. So again, we see this very explicit argument that India has to do both, that it needs to diversify, that for poverty elevation it needs cheap power even if it is dirty as well as perusing renewable energy. So, I have a lot of sympathy for this balancing act that New Delhi is trying to do.
Banik I was thinking about solar power and again, using my family as an example here I mentioned to you how I gave them this gift of an inverter and I was thinking maybe we should install solar panels on their roof in Calcutta. There is an abundance of solar energy, I was trying to look at various alternatives and it was so difficult to navigate this terrain and whatever was available ten years ago just wasn’t good enough, you know, using your Sundarbans example, you could run a couple of fans and a TV, not the ac, so it just didn’t seem to be very feasible, so that got me thinking and this is something I would like to hear your views on. One take I had was that solar energy was just not packaged in an attractive way for the middle class, if all our neighbours in Salt Lake City Calcutta, if they all could install something that was subsidised, solar panels, that would make a huge difference, it was just so difficult to access this and ten years ago the discourse on solar energy, it seems to me, it was more catered to the rural masses to charge phones, to have a solar cooker, it never seemed to resonate with the middle class.
Chatterjee I think you’re really onto something. As I said, I think the first designs for a solar cooker in India go all the way back to 1877 and the country was a real post-colonial pioneer in research in solar energy but as I mentioned before, as a sort of poor man’s energy a small-scale rural solution that was never going to be all that appealing to the urban rich. That has completely switched around as the grid has reached rural areas. And you are completely right, now there is a lot of talk about rooftop solar in particular and the fact that big headline 100 gigawatts of solar target includes a whopping 40 gigawatts of rooftop, which the country, I think it is about 6 now, it is going to massively miss. And that is no accident. Actually, it is really interesting you mention the case of Calcutta because West Bengal has really illustrated this trend, it was a real leader in rural solar in places like Sundarbans and now it is very hostile in lots of ways to renewable energy for quite sensible reasons. So, think about your parents, maybe they live in a nice residential colony building they are probably some of the few customers, alongside industries and commercial users perhaps, that the utility can rely to pay quite high bills, because there is a lot of cross subsidisation of rural areas and the poor, and they are actually going to pay them on time, the quality of power really matters to them. Now imagine they have their own panel and all of a sudden you are losing that really great lucrative customer so this is what utilities around the world, and this term has travelled to India as well, called the, utility death spiral, that they fear, that all your good customers start leaving for their own power and to add insult to injury when they have too much power they want to sell it back to the grid, but they also want the grid for when it is not sunny, during the monsoon say or at night and this leaves then the utilities themselves serving an every poorer consumer base and you they were already in pretty bad financial straits so this looks pretty dire to them. For this reason, they have actually tried to block rooftop solar, quite explicitly in quite a lot of areas in India, West Bengal has also very much slow walked this, so it has been an interesting transition solar energy in this decentralised way has gone from this poor man's power in rural areas to this menace precisely because it is richer urban areas that are expressing interest in it now. But what it means is that that German style mode of having loads of decentralised rooftop solar generation is basically off the table at the moment in a meaningful way in India. But again, you know, I have a lot of sympathy for the utilities, that they look at their bottom line and they say: what are we going to do? We have to try and muddle along in terms of profitability whilst trying to meet at the same time, some of these big goals coming down from New Delhi, these big targets that actually really threatening them existentially.
Banik Lets return to India’s dependence on coal, which again fascinates me, because I was reading up on this and I found that Indian coal power capacity has actually doubled in the last decade and apparently the coal pipeline is the second largest in the world. Coal was also the largest source of electricity production in India, in 2010, coal fired power capacity accounted for 65% of the install capacity mix and in 2020 this was almost 74% and coal fired power plants operate in almost every part of India, most of it is of course concentrated in the eastern states like Orissa, West Bengal, we've been talking about, Chhattisgarh, Jharkhand, the so-called Indian coal belt. You mention this already before as to why there is this reliance on coal and I was looking at some of the recent research on the political drivers of coal in the power sector and it turns out that the real reason is India’s political economy, it is extremely important, coal mining for India, it provides a huge chunk of revenue to the central government in Delhi, in addition to revenue to all of the state governments, and then you have, I think you mentioned some of the state owned enterprises, you know Indian Railways the largest employer in the country, they all have this kind of vested interest in continuing with coal. So, I wondered if you could elaborate a bit more for the listeners on these political drivers of coal. In addition to what I mentioned, is there anything else we should be thinkingabout? And I am particularly interested, Liz, in understanding the kind of political debates going on in India in terms of coal or abandoning coal because in many parts of the world including the UK and Germany, they are shutting down coal fired power plants, whereas in India and China they still enjoy a lot of popularity, right?
Chatterjee Completely, and for some of the reasons you lay out, the revenue needs, for example, Indian Railway’s very heavily cross subsidises passenger fares which are very cheap, as anybody who has visited India will know, coal freight, employment generation and so on in the coal belt. But I think there is another side of the story that is really interesting and much more dysfunctional that it is worth spelling out because I think a lot of those employment revenue factors are quite familiar to say listeners who are based in even say West Virginia in the United States or something like that. What is really interesting about this huge surge that you laid out in the amount of coal capacity, is what has been the broader political economic affects and the fact that India is in something like the early throws in the transition away from coal but for all the wrong reasons. So, basically in the early 2000, as I mentioned, this path of ever greater liberalisation just stopped looking all that appealing and instead the government of India took it upon itself to catalyse private sector investment in infrastructure and it did this through lots of ways but especially its control over the financial system, about 2/3rds of assets are still in state owned banks, which is enormous, this is you know a statist financial system that rivals China's in some ways and there is a whole host of other governmental financial bodies that would just pump money to any private player who wanted to get into coal. At the other part of this was the digressionary hand out of coal blocks for mining, on a very opaque basis that went on during those years. Basically, very Tom, Dick and Harry started pouring in and deciding they would build a coal fired power plant. At this point, in the 2000s to about 2011-2012 the Indian economy was growing really quickly, you know, 8-9%, and so the projections for the growth of electricity were very quick. So, in comes this binge of investment from the private sector but it is funded largely by state money in the public banking sector. A whole lot of things went wrong for India, part of it is international, you know, the global financial crisis, and then the so-called taper tantrum when the US federal reserve cut off spending, that really hit Indian exports, hit India quite hard. But also, all of these scandals started hitting the government, the biggest one of all around coal, the so called Coalgate scandal that broke in 2012 when everyone said, hang on you've been handing out coal to all of these people without any checks and balances and you know the result of this was then to paralyse the policy process, eventually the supreme court revoked all of those handouts of the mines so what happened then, was you've got loads and loads of coal fired power plants all coming online just as actual demand in India started to slump and India went from being a country that as you describe of your memory, that had a big deficit in power to having what looked like a glut, far too much coal fired power. This has been catastrophic for the private corporations, so you know, the big name that everyone always talks about in the Indian private sector is Ambani of Reliance, but of course there are two Ambani brothers, the younger brother who got into the power business actually had to declare bankruptcy not too long ago in London in what was the largest destruction of shareholder value in Indian history, and he is just one of a number of these big private players who poured loads and loads of resources into coal fired power plants and are now scuttered. But the worst side of this, was all of those debts that they have are in the hands of the state banks, so this has also paralysed private investment and public investment simultaneously, sometimes called the twin balance sheet problem. So, in this way, the slow growth that India has faced over the last decade is really in a lot of ways about the power sector. So why am I telling you this? Firstly, I think it is interesting, the electricity sector is dragging down the whole Indian economy via all these debts, but secondly it shows how troubled coal power is at the moment, banks and other players do not want to fund new coal fired power plants, there are already too many of them, lots of them are running at very low capacity, struggling to get coal from coal India which still does dominate the mining and this means that we do actually see that fossil fuels are a bit less attractive than we might think, so we should balance these two things. On one side there are all of the political economy factors we talked about, employment, revenues and so on in the coal belt, but on the other, there really are very big problems in this thermal power sector that mean if I were an investor I would certainly not be getting involved in it right now, so you know, bad for the Indian economy in the short term but possibly good news in the longer term.
Banik That is a very good point Liz, because I have noticed how the Chinese in their investment in Africa have recently pulled out of financing and building a coal fired power plant in Zimbabwe, which surprised me because they just, last year, said they would, and I think they even began constructing it. There is this movement in many parts of the world, and it turns out that Beijing isn’t very keen, they have been criticised for having supported and financing these polluting power plants. I am thinking also about my own country Norway and some of these debates are somewhat similar, and yet maybe a bit different. We have a general election next month and there has been a whole lot of attention in the election campaign, especially in the last two weeks on the latest IPCC report that recommends us abandoning the search for fossil fuels and you know we rely heavily on the income from offshore oil, that has made this country extremely rich and some of the green parties now are arguing for an end date for oil, we should even stop pumping out even more offshore oil, and it turns out we have only utilised half of our oil reserves but the youth and many organisations are saying we should just leave these untouched that we have made enough money from dirty oil and we have polluted the environment and we should set an example. The counter argument again in politics, from certain political parties, at least on the right, has been for a small country like Norway, you know, we do produce 2-3% of oil in the world but if we stop it won’t make much of a difference at the global level because you have countries like China and India and of course the US that will continue to rely on oil and they will be happy to just get their supplies from other countries. I remember a conservation I had Martin Wolf from the Financial Times last year and he was arguing that the real problem isn’t what we do here, whatever we do in terms of changing our consumption etc will not matter until India and China really make certain changes in their policies but we have to also be aware of, this is Martin Wolf's argument, many of these countries still have large groups of their population that live in poverty and that emissions per head of these groups including most African citizens is relatively low, so the point here is that no country in the developing parts of the world would be willing to be locked into this kind of unequal emissions per head at the cost of permanent relative poverty. So, while we try to persuade all these stake holders on an effective global plan of action, we should also prepare ourselves for some sort of heroic adaptation and crisis. How would you see this from an Indian perspective? All these debates going on in Europe and the US on cutting our reliance on fossil fuels, on moving on, are they amused to see this kind of debate going on here? Or can they relate to it, some of the Indian politicians?
Chatterjee Yeah, it’s a great question and the Norwegian example is just so fascinating as well. I mean India until basically the Paris Agreement in 2015 was very very much committed to the idea that historical responsibility and per capita emissions were the key determinants of who should act, and that is still a big powerful thread in Indian climate policy, to that extent, it is about time that these rich countries that are incredibly energy intensive, start to act. I mean from India’s perspective, it is terribly unfair and detrimental that it is forever bracketed with China in these conversations, I mean the Indian per capita emissions are half of the global average and China's are well over three times as much as India’s. So these are two really different economies in lots of ways, China is much wealthier, its 28% of world-wide emissions now, India still has an extraordinary long way to go, and I think this really does shape the conversation, it is the reason why China has been perhaps willing to talk about a net zero target in a way that I think would be a little bit more perilous for India to do, can India say that its emissions should peak right now? When actually so many people's energy consumption is very low and only just gained access to modern energy for lots of things. So, I think this shapes in lots of ways the Indian take on these debates. Instead, though, India is offering itself up as a different kind of leader on climate change, so the key word here, that first academics then Indian policy makers took up was the idea of 'co-benefit' the idea that sure you could do climate friendly things if they had developmental benefits. Here, I think is where we see solar energy being so appealing that it allows you to square the circle seemingly of energy and environment, I mean it has all sorts of environmental problems that we sometimes overlook. So, India is very much putting itself forward, in Paris both with the International Solar Alliance and so on, as a different kind of leader that says we are going to try and leapfrog past some of the worst parts of western style development, but you know it is not on us to make these intense cuts. In some ways it is like what the western de-growth people say, the west needs to stop and actually shrink but they do admit that countries like India do require carbon space for continued growth and that is a position I have a lot of sympathy with.
Banik Let’s move on to one final set of issues. I know you have studied the politics of electricity reform in the east Indian state of West Bengal which did not follow the typical World Bank template for electricity liberalisation and what is particularly interesting here is there is considerable interest in many parts of the world including in sub-Saharan Africa to better understand how power sector reforms can become more effective, because in many of these countries, the power sector appears to be underperforming despite market reforms. So, for the listeners, could you very briefly tell us what you found in West Bengal, how did they approach reforms differently from the typical World Bank template? Secondly, what lessoned do you think West Bengal offers to not just perhaps other Indian states but also for countries in Africa, Asia and Latin America?
Chatterjee Well, so, the World Bank template which is, you know, a kind of framing that the World Bank itself has rejected and they have moved away from, this was built on a lot of rich world experiences that suggested in the mode of say Margaret Thatcher’s UK that the best way to improve power sector efficiency was a policy prescription for unbundling previous vertical monopolies privatising them, re-regulating on the other side to introduce competitive markets with lots of private participation. That is a template that was rolled out across the world and the global south and that has not done terribly well. So, this is why I was so interested in what West Bengal did differently, because, at least for a window of time, it seemed to be a state that really improved its management of power, cutting down levels of electricity theft, which are extraordinarily high in India and so on without doing this mode, so what did it do then? West Bengal reformers did have a shared vision with the world bank in one way which was this idea of insulation which as Quinn Slobodian has pointed out, insulating things from politics is an electrical metaphor, but rather than doing this by bringing in market discipline and independent regulators, they decided to do it by strengthening the state-owned utility and make it much more independent. With the benefit of hindsight, it has proved a little less sustainable than we would like to think, there has been a lot of populist pressure placed back on it. But some of the measures they took which really consciously imitated private sector forms of governance like independent board members, very clear performance standards, prioritising profitability very heavily in order to guarantee independence from the state government. Some of these look like quite sensible ways to preserve modes of state ownership whilst taking some of the best lessons from the private sector. So, you avoid the thorny issue of privatisation, but you bring in some of these lessons by the back door. I think this is a really interesting model in some ways, partly because the World Bank model is so discredited but also because, if we look around the world today, I work a lot in environmental history, climate politics and so on, everybody's image is that its big private corporations like Exxon Mobile who are baddies, which is true they are villains of the peace, but if we look at the biggest 20 firms most responsible for emissions from 1965, 12 of them are state owned and are headquartered outside the west. So, if we are actually to be a bit more realistic about this, actually state owned enterprises are really central to the energy environmental crisis that we face, and we need to think a little bit more about how they can be run in ways that prioritise long term goals like efficiency over short term giveaways of subsided fossil fuel energy, that leads to all sorts of irrational overuse like in India’s case, pumping way to much water, and precipitating this water crisis that I am very worried about. I think that the West Bengal model shows that there is a path forward for some of these state owned enterprises to tread that is about more professionalised and autonomous management, and that politicians actually kind of like this in some ways because they want to tie their own hands on some of these issues, they don’t necessarily want to be locked into big giveaways of energy, but they feel a whole lot of political pressure to do so. So, there is an interesting coalition of interest that can get behind this kind of long-term reforms without going down the road of privatisation and on and on. This is what is really interests me about that model, although you know I don’t see any signs of everyone turning around and heading to Calcutta for advice at the moment.
Banik What fascinates me about this is that on the one hand there are lots of studies that show that without political interest and commitment, policy is bound to fail, you really have to have policy ownership, but on the other hand, what you describe is interesting in the sense that lets say politicians are somehow relieved of their responsibilities or not directly involved it is also very useful for them to then blame the regulators or other agency for potential failure so they don’t have to cop all the blame and they can deflect the criticism. So, I suppose there are elements of both, you want to be involved somehow, have some ownership, and yet have some sort of independence that could be useful anytime things go wrong, and you have somebody to blame.
Chatterjee Oh I think that is a very perceptive observation. I do think that many more politicians are not credit maximising but blame minimising, you know, they might be a bit keen to take credit, but they are even more so to doge the bullet when something goes wrong and you're right this kind of autonomy then gives them something to scapegoat as well. But you know this is what is necessary, we have to be honest about the energy transition and all sorts of other reforms like making the power sector more efficient, it creates losers as well as winners and those losers are going to be irritated. Part of this is thinking about the lessons for how to make it a bit more politically palatable whether that is to compensate people who work in the coal belt, whether it is to give lightning rods that mean that politicians can feel a bit freer to take these somewhat risky but long-term beneficial decisions.
Banik So, I have to ask you one final question Liz, and that has to do with the so called Gujarat model, which has received so much attention because India’s current Prime Minister, Narendra Modi was the chief minister of the state of Gujarat and he was credited for developing the state very well, and in your work you have tried to, I suppose, contrast the West Bengal model with the Gujarat model. Could you highlight very briefly the similarities and differences? What worked in Bengal that didn’t work in Gujarat and vice versa?
Chatterjee So, the Gujarat model as it is typically understood is, if you like, growth without development, it is characterised by very close state business relationships, but it seen as prioritising GDP growth and elite interests over welfare spending. I think if you actually look at the energy sector, you get a little bit more of a nuanced picture than that. So, what I try to show is that there are actually some surprising similarities between supposedly pro-business Gujarat and supposedly, until 2011 for 34 years ruled by a communist party, West Bengal, and that is in the area of heavy state intervention. In Gujarat, actually, the crowning jewel of the model within India though overlooked by scholars of the west have been it power sector reforms and they are very similar, they prioritised utility autonomy, processed height reforms over privatising the utility itself, even while bringing in lots of private investment on the side. I think that those similarities are quite interesting, and again it suggests that there is a path through what Modi himself called the third option between privatisation and state ownership that is rooted in autonomous public sector management. Now, where I am way less sanguine is if we look at the other side of the Gujarat model, the state has really heavily promoted this petrochemicals and gas development economy alongside solar energy which is environmentally devastating as well as having these well-known features of increasing inequality in the model as a whole. I also think that we have over emphasised the smoothness of the relationship between the state and business, to me, it is very clear if we look at the present government in New Delhi and reflect back on Gujarat that the state is in the driving seat and big business isn’t always like it. I don’t know if you spotted, about a week ago, the commerce minister who is actually the former energy minister went on a 90 min rant on how Indian industrialists are not serving the national interest, primarily directed at the Tartas I think. So, what we see here is, you know, people have started talking about authoritarianism and so on, I probably wouldn’t go that far, I would say an illiberal, very statist government is in control at the moment and as the Gujarat example shows, it’s tended then to sometimes lead to really quite sinister social, environmental and even economic dimensions as well. So, although we talk about it as a model, it is definitely not a model that should be taken up wholesale by any extent, I think it has all sorts of quite worrying flaws in it. Nonetheless it’s interesting and those achievements in sectors like electricity and solar energy we have to weigh up against the really notorious dreadful things that have gone on in Gujarat since 2002 in particular. Working on environment and energy policy there aren’t any nice black and white answers, everything is various shades of grey and you know it’s tricky, there is not going to be any single of silver bullet.
Banik Liz, it was great fun to chat with you today, thank you so much for coming on my show.
Chatterjee No this was absolutely wonderful thank you so much and really wonderful to work through a lot of these questions with you.