The government continues to add to the list of 'minor' policy changes regarding the SEZs. Referring to them, at times, as 'implementation' issues, or operational matters, the Commerce Dept gives the impression of engaging in a relatively unimportant administrative clean-up exercise, as if the decisions taken were not of major consequence for certain constituencies. A particularly salient change -- in the spirit of earlier reforms to the way in which SEZ investment is classified, or the period of time within which certain actions must be taken -- we now hear of a commerce ministry proposal to allow SEZs that have developed 'captive power plants' to distribute electricity within their boundaries without obtaining a license of the state government concerned. Nor would they need a licence to tap sources of electricity from outside the SEZ. The change requires an amendment to the Electricity Act (Section 14).
In a sense, this IS mainly a question of administrative coherence, since it makes no sense to allow an SEZ to generate power if it cannot distribute it. On the other hand, this eventuality had been foreseen at the time the SEZ Act 2005 was passed, and it was specifically decided that state governments, who feared (with good reason, as it turned out) that their prerogatives would be undermined by certain aspects of the SEZ movement. Perhaps most importantly, the Development Commissioners may be in a position to take over decision-making responsibility over the implementation of various functions within their SEZs. Labour and environmental clearances are the ones most frequently mentioned. This can, potentially, amount to something approaching policymaking control once implementation decisions begin to acquire a particular bent in terms of how they interpret existing policy. So to the extent that this new decision on electricity-distribution claws back from state governments an important veto point -- the withholding of which could be used by states to force compliance by SEZ promoters with other agenda items outside their purview -- it is a substantial matter.
This process of fostering the accretion of layers of small policy change -- decisions which nevertheless have a HUGE impact not just on government actors such as state government departments, but also of course the corporate interests involved -- is consistence with earlier practice, some examples of which can be found in earlier blog posts. It is also an extension of the logic of reforming by stealth, which has characterised the politics of reform in India for many years now. While such a strategy would seem to have a diminishing shelf life over time -- and it does -- it is proving remarkably effective in keeping the potential political opposition to SEZs wrong-footed. Despite the protests on certain egregious projects, the ability of opposition parties at the national level to hit at the core of the SEZ phenomenon is striking. Senior BJP members, including former ministers in the NDA government, have called attention to the party leadership's inability to make headway on this or any other issues.
Subscribe to:
Post Comments (Atom)
2 comments:
The delicensing of distribution is another aspect of the retreat of the state in key functional domains. A licensee is subject to tariff control by the State Electricity Regulatory Commission (SERC)and has an "obligation to serve", i.e., ensure that all residents receive service. It now appears that the SEZ developer will be free of both these constraints, i.e., it can charge an unrestricted tariff subject to market pressures, since too high a tariff will make investing in the SEZ unattractive. Low initial tariffs followed by higher tariffs once the industries have invested (making it costly to move) is also possible. Similarly, unreasonable connection costs or high residential tariffs can exclude the poor from being served in these SEZs.
None of this is inevitable, but the critical point is that there is no redressal mechanism if such abuses were to occur, since the SEZ is outside the purview of the SERC.
This is not so much "reform by stealth" as another instance of a stealthy (and steady) retreat of the state in India from its core functions even as it continues to clumsily try and expand its role in non-essential areas.
I think PM makes good points. Thanks. It is indeed a question of both price and service obligations, contractually (in addition to PERMISSION to provide service in the first place, which was the focus of the item posted). I'm not sure it has been definitively decided that SEZ providers will not have service obligations. But frankly, as you say, they have every incentive to do so to remain competitive. Also, even if they do fall out of the SERC net, there are provisions in the SEZ Act for special courts, which presumably would deal with precisely this kind of thing. I don't see that we disagree about reform by stealth -- clumsily trying to expand the state's role in some areas is what schizophrenic 'reformers' always seem to do, including those who plot the liberalization of certain policy decisions.
Post a Comment