This post is motivated by an observation by 'War on Want,' a London based organization which argues that privatization of power and other basic necessities in developing countries is akin to profiting from poverty. The argument lies that 1) World Bank and IMF restrains emergency aid and debt relief to countries unless they privatize their utility services (water, power, gas); 2) privatization often leads to global conglomerates hiking prices for the poorest of the poor to cover investment costs and then juicing the money out of the country.
The concerns are valid albeit their presentation far too biased. Resolutions to these are barely considered with mass strikes against power privatization in Andhra Pradesh and Maharashtra in India highlighted but its effectiveness in Mumbai and Delhi denied any appraisal. Agreeably, the poorest of the poor live far from these metropolitans, but an imposition of 4:1 rule to accommodate power for poor states could be a much better solution than completely negating privatization and multinationals as devils fostering poverty.
Disinvestment is urgent in India where 42% of public power is stolen and unpaid for, if it wants compete against neighbour China which has a commendable 3% loss. Large deficits (73k million units) of power continue to hamper infrastructural improvements in India which will need more than 400,000 MW of electricity (which is more than a whopping 120% of what it currently has) by 2020.
Privatization of major utilities such as water and power is often discouraged as it leads to monopoly access to the country's most needed resources. India, however, is a case of monopolistic competition due to 1) a check on entry deterring strategies by monopolies and 2)already existing tiering of power bodies at the State and National levels. However, War on Want's vehemence towards Globeleq is probably justified in case of India. Entry of foreign firms leads to huge foreign exchange outgo and loss to indigenous industry supplying power equipment. But the case for Indian players Reliance and Tata power still stands credible if the nooks and corners of the 100 million strong country are to be reached.
But these companies need to be incentivized to follow something akin to the 4:1 policy implemented in the case of Social Banking Experiment of the 70s. The banking experiment lead to drastic reduction in poverty and availability of credit as it forced private banks to open 4 banks in unbanked locations before opening 1 in urban areas. A similar yet easier policy could be of supplying power free of cost to 4 villages for every city charged for power. Easily accessible and efficient power to farmers, small village enterprises, rural households, schools and medicine dispensaries would no doubt go a long way in closing the ever widening elite-poor gap.
The concerns are valid albeit their presentation far too biased. Resolutions to these are barely considered with mass strikes against power privatization in Andhra Pradesh and Maharashtra in India highlighted but its effectiveness in Mumbai and Delhi denied any appraisal. Agreeably, the poorest of the poor live far from these metropolitans, but an imposition of 4:1 rule to accommodate power for poor states could be a much better solution than completely negating privatization and multinationals as devils fostering poverty.
Disinvestment is urgent in India where 42% of public power is stolen and unpaid for, if it wants compete against neighbour China which has a commendable 3% loss. Large deficits (73k million units) of power continue to hamper infrastructural improvements in India which will need more than 400,000 MW of electricity (which is more than a whopping 120% of what it currently has) by 2020.
Privatization of major utilities such as water and power is often discouraged as it leads to monopoly access to the country's most needed resources. India, however, is a case of monopolistic competition due to 1) a check on entry deterring strategies by monopolies and 2)already existing tiering of power bodies at the State and National levels. However, War on Want's vehemence towards Globeleq is probably justified in case of India. Entry of foreign firms leads to huge foreign exchange outgo and loss to indigenous industry supplying power equipment. But the case for Indian players Reliance and Tata power still stands credible if the nooks and corners of the 100 million strong country are to be reached.
But these companies need to be incentivized to follow something akin to the 4:1 policy implemented in the case of Social Banking Experiment of the 70s. The banking experiment lead to drastic reduction in poverty and availability of credit as it forced private banks to open 4 banks in unbanked locations before opening 1 in urban areas. A similar yet easier policy could be of supplying power free of cost to 4 villages for every city charged for power. Easily accessible and efficient power to farmers, small village enterprises, rural households, schools and medicine dispensaries would no doubt go a long way in closing the ever widening elite-poor gap.
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