PM Modi has chosen the road he will take to 2019. It is the one lined up with electrified households on either side.
Challenge? There are about 4 crore of them.
Saubhagya - Pradhan Mantri Sahaj Bijli Har Ghar Yojana – is another ambitious move by Prime Minister Narendra Modi to extend better quality utilities to the less privileged. Completing the quartet alongside access to cooking gas (Ujjwala), pakka houses (Pradhan Mantri Awas Yojana - Gramin) and high speed Internet (BharatNet), power to every household has a potential to improve rural lifestyle and create positive dovetailing effects on health, education, and sanitation.
The Bharatiya Janata Party has already reaped rich dividends from the Ujjwala scheme in state assembly elections. Modi will be hoping that the access to household power before the next general election creates a similar tailwind. To be sure, Swarajya predicted that access to power was a critical poll plank way back in March 2015. Since then, the Modi government has shifted the focus from electrifying hitherto un-electrified villages to bringing power to all households.
On 15 August 2015, Prime Minister Modi declared from the ramparts of the Lal Qila that all villages in India will have power within thousand days. That target, involving the provision of power access to 18,542 un-electrified villages will now be completed by December 2017, a saving of 132 days over the original target. But electrified villages do not mean 100 per cent electrified households – in fact they never did. This common misgiving conflating the two was incorrect, but Saubhagya ups the ante in bridging this gap. The plan now is to bring power to all interested households in these 18,542 villages as well as un-electrified households in lakhs of other powered villages by 31 December 2018.
Saubhagya comes at an interesting juncture. Piyush Goyal, the original architect of the power reforms and structural sector changes, has moved to the Railways Ministry. He is succeeded by former bureaucrat R K Singh who will pick up the mantle of implementing the last intervention designed by Goyal before the ministerial reshuffled happened.
A quick look at the Grameen Vidyutikaran (GARV-II) app shows that of the 17.92 crore households in India, almost 4.05 crore households remain to be electrified. Uttar Pradesh with 1.46 crore and Bihar with 0.65 crore households top the list of states awaiting power supply. Madhya Pradesh, Odisha, and Jharkhand bring up the top five states. Assam, Rajasthan, Karnataka, Haryana, and Chhatisgarh are the other states contributing significant numbers to the count of un-electrified households.
Thus far, the Deendayal Upadhyay Gram Jyoti Yojana was focusing on creating a rural electrification backbone, separating feeders for agriculture and non-agriculture use. Increase in transmission capacity between power-producing and power-consuming regions was a key focus area last two years. Saubhagya will go a step further creating Rs 16,320 crore corpus to solve the last mile challenge. Of this outlay, Rs 14,025 crore will be marked for rural areas and Rs 2,295 crore for urban areas. The allocations will have to cover for capital expenditure on all equipment lying between high voltage transmission lines to last mile facilities, including transformers, substations, electric meters, wires, and cabling. Some of the existing equipment will need upgrade too especially in the urban areas, to cater to increased power consumption.
An associated benefit of the scheme will be government buying this range of electrical equipment from the market. There are several Indian and global firms operating in India in the electrical engineering and goods sector and most certainly some will stand to benefit in the coming year. This boost to Indian manufacturers will be helpful in these times of excess, idling capacities.
This scheme is about the government spending the earmarked corpus one-time to put the required infrastructure in place. There is no provision for ongoing bill payment for the households which get electrified, so this is not an operational expenditure subsidy program.
The scheme design will rely on the 2011 socio-economic and caste census to identify households that will get free connections along with metering facilities. The households not included in this census data can pay for their connections at a nominal fee of ₹500, which the local power distribution company (discom) can claim in ten monthly installments. For very remote villages, the Saubhagya scheme will provide solar power packs, battery back, with LED lights, and a direct current driven fan.
The Saubhagya scheme will be run by the Rural Electrification Corporation (REC) as a nodal agency. This is a good decision for two reasons. Firstly, since the REC also owned the electrification of the unpowered 18,542 villages, it has credible experience of running nationwide electrification programs in collaboration with state discoms. Secondly, the REC is a well-managed public sector enterprise (PSE), with high-quality engineering and administration talent, especially in relation to other departmental PSEs.
Through the GARV-II app, the REC also has information on all un-electrified households already. This will become the backbone of transparent tracking and monitoring of the Saubhagya scheme till December 2018. This electrification data comes from various state governments and in the past, there has been some criticism of accuracy. However, Goyal had set up an audit mechanism of the claims made by the state discoms when submitting the data to the GARV app. The REC should strengthen this audit mechanism for Saubhagya, as there will be much more scrutiny on household electrification data in the course of implementation.
Of all the schemes attempted by the Modi government to address the issues of the power sector, Saubhagya is by far the most difficult by a distance. There are several impediments to the scheme, which will need skilled problem solving and conflict management over the next 15 months.
The first challenge that the REC will face is to identify what’s an un-electrified household. It is possible that a household took a power connection, but didn’t pay the bills and the local discom terminated the connection. Some households may have illegal power connections, but maybe classified un-electrified on paper. Several such hyper-local issues will have to be resolved. The REC should leave such issues to the local discom and focus on scale rather than intermediation, or else the scheme may get embroiled in intractable problems.
The state discoms are amongst the least efficient PSEs in India for most part. It will be a huge challenge for them to support the REC ambitions, especially in the 10 states needing most work. These are also the states which traditionally have had poor discom management and work ethics. The union government should ab initio solve this problem and assign manpower support to key states on day one – just as it was done for the village electrification program.
Then there is the quintessential Indian dilemma – what if the households accept the free connection but do not pay discoms in time when they start using power. In the case of the Ujjwala scheme, which deals with providing free LPG connections to poor households, several states have clocked impressive repeat usage rates. In other words, the beneficiaries of the free one-time connection have come forward to pay for the refill gas cylinders as they see real value in using the LPG. Will the same apply to Saubhagya beneficiaries? There are no easy answers, and the REC should educate the beneficiaries on how using power will change their lifestyle, cajoling them into staying on-grid over time.
Then there is the ultimate challenge once the infrastructure is in place – will the ongoing power supply be reliable? Will the available power be of good quality? How many hours will discom be able to supply power to villages? There are very valid questions, especially in the light of poor discom operations across the country, including big cities, which frequently see power outages. In fact, this issue is so severe, that Prime Minister Modi actually spelled out his ambition of providing sulabh (easy), sasti (affordable), swachh (clean), suniyojit (planned), sunishchit (guaranteed) and surakshit (safe) bijli (power) in his launch speech on 25 September. These are great goals to set, but will need deep discom cooperation and clean-up to actually make it happen on the ground.
In some cases, the union government can help. India today has an installed power base of about 330 gigawatts (GW) of power generation. The peak generation however is unlikely to cross 170 GW this year. The union government can pool the stranded generation capacity for the time-being, signing centralised power purchase agreements (PPAs) and assigning costs to state discoms. India has enough power to supply to these 4.05 crore households, it’s a question of ensuring that the state discoms don’t dither on the task. A union government PPA pooling can help address this challenge for the first couple of years.
While India has the third largest power generation capacity in the world after China and the United States of America, our per capita power consumption is an abysmal 1,075 Kilo-Watt hour (KWh) for 2015-16 as per a Central Electricity Authority report. Comparing with the per capita consumption of other countries, this is pittance – we are at 2 per cent of Iceland, 8 per cent of the United States of America, and 25 per cent of China figures. As the Indian economy grows, there is enough upside to how much power can the country consume. So the demand is not in question and the excess supply is available for now – Saubhagya will look to marry the two.
Ultimately, Saubhagya is an infrastructure creation program, which is definitely necessary to power up an estimated 250 million Indians who live in the dark today. But the program is not sufficient in itself. The ongoing power use by these households will require further interventions by the union and state governments. For now, R K Singh should recognise this gap, but not let the necessary condition suffer in the absence of a sufficient one.
As he launched the scheme, Prime Minister Modi remarked that poor people will now have Saubhagya (good luck) of having power in their homes. Will he have the good luck of capitalising on the scheme for an electoral upside? We will know in December 2018 when Chhatisgarh, Madhya Pradesh, and Rajasthan go to polls.