Electricity, perhaps, is the one of the most important commodities, yet significantly under-valued. Don't get me wrong - everyone hates power cuts; but its true value is not fully appreciated. Electricity just doesn't run television at home, it also provides a few hours of daily family entertainment to lower-middle / poor class, for whom otherwise no real, affordable alternatives exist. Industries are large beneficiaries as well - higher uptime results in efficient utilization of resources (including labour), higher output and value creation, and economic well-being for human factors.
After a much publicized visit of Arvind Kejriwal to Gujarat, there are debates on SM whether Gujarat is really as advanced on electricity front as is often claimed by its long-serving CM Mr. Narendra Modi. Dubious claims are made by both sides on this issue. I believe this can be satisfactorily analysed and concluded based on reliable data available in public domain.
Census, a periodic primary research done in our country, provides insights at a very granular level for several socio-economic indicators. It's remarkable since it doesn't involve samples - entire population of the country is covered. While it is conducted only once every 10 years, fortunately in this case this fits well on the timeline: Census 2001 was done somewhere over March-September 2001, coinciding well with Mr Modi starting his tenure as CM of Gujarat in Oct 2001. Comparing Census 2001 to Census 2011 should give us a very good insight into what Mr Modi's government was able to achieve in these 10 years in Gujarat both on absolute and relative basis. Point to note: Mr. Modi has been CM for more than two years even after Census 2011, hence any inferences drawn from comparison of Census 2001 to Census 2011 should also be augmented by analysis of data beyond 2011 till today, to the extent available.
So let's come to the analysis: Census collects data on "Primary Source of Lighting" at a household level: whether it is electricity, kerosene or something else (solar / other oil etc). This, in my experience, is the closest proxy of how many households are truly electrified. I reject data on how many villages electrified (definition of "village electrified" is unclear, prone to inconsistency across villages / states, a village can be partially electrified etc, more on this later). I also reject data such as number of new electricity connections sanctioned (its merit depends on size of the state, starting position etc). Slight nuance: While a household might technically be electrified but due to very extreme power outages (such that electricity is practically just not available), the household might not be counted under electricity as primary source of lighting. It's acceptable - just having a wire connection with little to no power should not count.
The graphs below compare states on their relative performance on being able to migrate their population from kerosene to electricity (by electrification of their houses) between 2001 to 2011. For eg. India as a country moved from 56% electrified households (in 2001) to 67% households (in 2011), as illustrated by the first horizontal bar. For ease and relevance, only top 12 states by population are considered (cover 83.4% households of India in 2011): Gujarat being a mid size state would make for an unfair comparison with much smaller / less populous states/UTs.
%Households by Primary Source of Lighting (India & Top 12 states, 2001-11)
Note: Others includes solar, other oil and no lighting
My inferences are as below:
- Gujarat was able to improve from a strong starting position of 80% household electrification in 2001 to 90% household electrification in 2011, a commendable performance.
- However, Gujarat is not the best performer: All four southern states start from a weaker position in 2001 relative to Gujarat (esp. Kerala and Andhra Pradesh) and all these states close 2011 at 90%+, a good 1-4% above Gujarat.
- Since above analysis stops at 2011, Gujarat might have improved beyond 90% in 2012/2013, but so could have other states as well. We don't know further through census data alone.
- Unrelated to Gujarat, but West Bengal deserves special mention for improving access to electricity from 37% to 55% households. Mr. Buddhadeb Bhattacharjee was CM for almost the entire period of 2001-11 - he, despite being from a left party, is widely regarded as a reformist responsible for significant economic liberalization of West Bengal (and often criticised by his party for such reform policies).
- Odisha also delivered significant improvement from 27% household electrification in 2001 to 43% in 2011, same should be attributed to Mr Naveen Patnaik who has been running the ship over there since 2000. However, a lot still needs to be done in both WB and Odisha, both had a very weak starting position (2001).
- UP and Bihar languish at the bottom of the table, marred by bad governance under multiple political parties as far as the power situation is considered. Have a re-look at Bihar: only 16% households in the state use electricity as prime source of lighting. It is extraordinarily low. This is when on paper, 90%+ villages are "electrified" in Bihar as of 2013 (as suggested by multiple google searches, however could not locate authentic link).This discussion paper provides some perspective around definitions and challenges in Bihar pertaining to rural electrification (pages 12-15). There are serious questions that need to be answered by both Mr. Nitish Kumar and Mr. Lalu Prasad Yadav who have been in power during 2000-2011 for considerable time periods.
However, above analysis is not not sufficient to conclude that Gujarat is among top states when it comes to improving access to electricity during the time period 2001-11. Ask any woman managing daily household chores, or a businessman running a small manufacturing unit - consistent, predictable 24*7 availability of power is extremely important. So let's see where does Gujarat stand when it comes to meeting electricity demand by providing adequate electricity. Data for the table below is sourced from Annual Report of Central Electricity Authority, Ministry of Power, Government of India (2012-13). This table provides info on electricity demand and supply (and hence surplus/deficit) overall as well as during peak hours. As one can see, India as a whole had a power deficit of 8.7% on average and 9.0% during peak demand hours.
(The states are ordered in the same performance order as in the above graph for easy comparison).
Electricity demand and supply for major states in 2012-13
Note: BU means billion units, 1 unit = 1kwh
The picture can't be clearer: all four southern states which earlier seemed to be out-performing Gujarat in the first analysis are completely failing on this metric. Peak stage deficits of 10-20% in these souther states as well as in UP & Bihar is horrible, to say the very least. Such power deficits force load shedding, which is never uniform within a state; semi-urban and rural centres face maximum power cuts. 10-12 hours of power cuts are not unheard of in these states.
Gujarat, on the other hand, has a power deficit of a mere 0.2%-0.3%, even during peak hours. That's commendable, and clearly the best performance among all 12 major states. This directly implies 24 hours power availability every day of the week - well, 23 hours 57 minutes 7 seconds daily to be exact.
If there is any other state that deserves a mention, it's West Bengal. While WB still lags far behind on electrification (55% households electrified as of 2011, see previous graph), it runs a power deficit of just ~1% during peak hours. Goes to say more about how Buddhadeb was an odd man out in his party.
Finally one must also explore as to how Gujarat has been able to achieve the above, and whether the model is sustainable or prone to breakdown under pressure? The table below compares financial performance of the state electricity distribution companies for all 12 major states over three fiscal years. The data is sourced from performance report published by Power Finance Corporation, a GoI undertaking and "a Financial Institution (FI) dedicated to Power Sector financing and committed to the integrated development of the power and associated sectors". Cash profit (excluding Subsidies received) for distribution companies for 12 major states(Rs Crore)
Note: (Cash profit - Subsidies received) is used as a measure of financial health of state's distribution companies. In my opinion, that's the best representation as it doesn't consider any subsidy received from government (since subsidy is not a sustainable manner of operating) as well as also removes any amount booked as revenue in the P&L statement but lies as incremental receivables in the Balancesheet (i.e. not collected as cash). Experts in power sector & accounting will tell you that any increase in receivables in a utility business are better written off - they would mostly never be realized as cash.Source: Performance section on PFC website(Click on the link "Performance Report of State Power Utilities")
Exact link of pdf file, (Pages 70-75)
As the table above demonstrates, the four states of Gujarat, West Bengal, Kerala, and Karnataka (highlighted in the table above) are able to conduct distribution operations without operating losses even before any government subsidy kicks in. This is not to suggest state government doesnt provide subsidy to its distribution companies, but these that distribution companies are financially healthy on their own. What's remarkable is that at least for Gujarat, all four distribution companies are 100% government owned - Mr. Modi got it done using the state resources alone!The verdict:
All other major states (especially Tamil Nadu and Rajasthan) present a very sorry state of affairs. Result: massive government subsidies and/or losses on balancesheet, no money / delayed payments to pay to power generating companies, load-shedding...Indeed, working capital cycles in Tamil Nadu have often been mentioned to be in the range of 9-12 months.
- 90%+ households in Gujarat have access to electricity (as of 2011) which is in close range of the best performing states - Kerela, AP, TN and Karnataka. Still, a small gap remains, efforts should be made to close the remaining 10% as well. All other major states lag behind significantly, though WB and Odisha made very significant progress during 2001-11.
- Gujarat, (with West Bengal a close 2nd), is far, FAR ahead of all other major states on providing adequate electricity to its electrified households as per demand: 24*7 electricity to all households with an electricity connection to be precise (for financial year 2012-13). Negligible deficit ratios of (~0.2% in Gujarat, ~1% in West Bengal) are commendable achievements.
- Gujarat power distribution model seems sustainable: state distribution companies are financially sound, as is the case with three other states (Kerala, Karnataka and West Bengal). This is in stark contrast to all other major states, where distribution companies are in financial doldrums.
If one has to pick a winner, it would be extremely hard to chose from Gujarat and West Bengal, maybe the former has a very slight edge - but one should also consider the huge disadvantage West Bengal started off with in 2000 before Mr. Buddhadeb came along. Quite deservedly, Mr Modi needs to be given credit for this fairytale story when most other states struggle. It is very hard to pick a state for the third spot - rather, it is safe to say that the difference in performance of these two top states of Gujarat and West Bengal and that of all other major states is very, very significant. One should give credit where due.
Specific measures taken by the state government in Gujarat under Mr. Modi which has resulted in the above performance is not a subject of research of this article, the same is easily google-able.
Food for thought: Free power in short run means no power in long run.