And then there was no light
27 Oct 2012 8:57 PM GMT
India’s scams and corruption are perennially ubiquitous – they keep recurring time and again. Typically, a scam exposé starts off with media frenzy and then gets lost into thin air! Even though media spotlight continues on the case for a while, the same mostly focuses on the economic aspect of it, largely ignoring the enormous social impact. Mostly, the multi-million dollar scams have huge negative externalities both at the regional and national level.
Let me talk a little about the recent scam – Coalgate! Coal mining – the lifeline of thermal power that constitutes around 66 per cent of installed capacities in power generation in India – is very inefficiently run. The sector is marred by massive pilferage and corruption with open disregard to environment and conservation. However, there are many other serious ground concerns. To start with, the mandatory regulation of open cast and underground mining requirement is flouted openly, causing health hazards on account of environmental degradation per se. The corruption level is beyond one’s wildest imagination. Even the sand purchased to fill the old mines is being sold in the open markets for petty gains! There have been waves of protests in most of the coal mining states – particularly socially conscious Maharashtra – against pollution, environment hazards, and land acquisition... but nothing much was done.
Take the case of Coal India Limited (CIL) for instance. CIL, which controls almost half of the country’s energy requirement, dishes out freebies like selling around 80 per cent of the coal with upto 70 per cent discounts on landed cost, ostensibly so that the poor can get subsidised coal! In reality, the gain actually goes to the power companies, who sell power at market determined rates despite sourcing coal from CIL at discounted rates. Non power companies too don’t allow the CIL discount to be passed on to the end user. And yet, the government defends CIL as a body that is committed to provide subsidised coal to the poor.
The coal mines also ruin the environment by destroying the forest cover and even encroaching on animal reserves. The coal mines of Madhya Pradesh, Chhattisgarh, Jharkhand and eastern Maharashtra are cases in point that brought the humans in direct confrontation with tiger reserves. Coal mines are also having telling effects on the tribal groups in these areas, whose sole source of livelihood is the forests. And this is the same story everywhere and every time – that after a few years, a once green belt turns into a rocky terrain, which eventually becomes unfit for human habitation. Add to this, the money spent by the poor in the mining areas for treating ailments caused by inhaling coal residuals that are left in the open; not to forget untimely death, which is still a norm in such regions. The counterbalance behind the wisdom of coal mining, which is electricity generation, still is not enough and leaves 40 per cent of India’s population in perpetual darkness!
Surprisingly, only 50 per cent of electricity generated in India is billed, of which only 40 per cent of consumers pay the bill regularly. Power theft costs the nation around Rs 40,000 crores annually. Today, even a rich politician gets free power. So do government departments (including courts); and above all, vote-hungry politicians are found waiving off electricity bills to the tune of thousands of crores. This, in the light of the fact that hundreds of villages are yet to see some kind of light. In simple words, the losses faced by power companies due to thefts, waivers and free electricity lunches are passed on to the bottom 80 per cent through high electricity costs per unit, erratic power supply, blackouts, frequent power cuts, inflated bills, and above all, opportunity costs. Imagine the economic and social loss a small businessman would face due to such power failures or the additional cost he has to bear as he eventually has to rely on a diesel-based generator! This is evident from rising electricity costs per unit since the last half a decade! And mind you, I have not even started talking about the indirect cost one has to bear with respect to increased fuel prices and food prices – both of which have a direct correlation with power supply and power cost.
What makes Coalgate and similar scams different from their counterparts is the way they impact the common man’s life. For one single Coalgate to happen, the entire social cost is forced down the throats of the poor. For the poor, it is a perennial battle for their lives and livelihood. And that too without even getting to bear the fruits in the process – thanks to the artificially created power shortages. It is no secret that without power, the fruits of development cannot percolate down, which otherwise could have enriched the lives of families living below the poverty line and helped them to climb up the social ladder.
So it is not just about the crores that get swindled with every such Coalgate scam; it is more about the social costs that the nation bears... costs that have a wider impact and almost always go unnoticed.
Arindam Chaudhuri is a management guru and director of IIPM Think tank.
Let me talk a little about the recent scam – Coalgate! Coal mining – the lifeline of thermal power that constitutes around 66 per cent of installed capacities in power generation in India – is very inefficiently run. The sector is marred by massive pilferage and corruption with open disregard to environment and conservation. However, there are many other serious ground concerns. To start with, the mandatory regulation of open cast and underground mining requirement is flouted openly, causing health hazards on account of environmental degradation per se. The corruption level is beyond one’s wildest imagination. Even the sand purchased to fill the old mines is being sold in the open markets for petty gains! There have been waves of protests in most of the coal mining states – particularly socially conscious Maharashtra – against pollution, environment hazards, and land acquisition... but nothing much was done.
Take the case of Coal India Limited (CIL) for instance. CIL, which controls almost half of the country’s energy requirement, dishes out freebies like selling around 80 per cent of the coal with upto 70 per cent discounts on landed cost, ostensibly so that the poor can get subsidised coal! In reality, the gain actually goes to the power companies, who sell power at market determined rates despite sourcing coal from CIL at discounted rates. Non power companies too don’t allow the CIL discount to be passed on to the end user. And yet, the government defends CIL as a body that is committed to provide subsidised coal to the poor.
The coal mines also ruin the environment by destroying the forest cover and even encroaching on animal reserves. The coal mines of Madhya Pradesh, Chhattisgarh, Jharkhand and eastern Maharashtra are cases in point that brought the humans in direct confrontation with tiger reserves. Coal mines are also having telling effects on the tribal groups in these areas, whose sole source of livelihood is the forests. And this is the same story everywhere and every time – that after a few years, a once green belt turns into a rocky terrain, which eventually becomes unfit for human habitation. Add to this, the money spent by the poor in the mining areas for treating ailments caused by inhaling coal residuals that are left in the open; not to forget untimely death, which is still a norm in such regions. The counterbalance behind the wisdom of coal mining, which is electricity generation, still is not enough and leaves 40 per cent of India’s population in perpetual darkness!
Surprisingly, only 50 per cent of electricity generated in India is billed, of which only 40 per cent of consumers pay the bill regularly. Power theft costs the nation around Rs 40,000 crores annually. Today, even a rich politician gets free power. So do government departments (including courts); and above all, vote-hungry politicians are found waiving off electricity bills to the tune of thousands of crores. This, in the light of the fact that hundreds of villages are yet to see some kind of light. In simple words, the losses faced by power companies due to thefts, waivers and free electricity lunches are passed on to the bottom 80 per cent through high electricity costs per unit, erratic power supply, blackouts, frequent power cuts, inflated bills, and above all, opportunity costs. Imagine the economic and social loss a small businessman would face due to such power failures or the additional cost he has to bear as he eventually has to rely on a diesel-based generator! This is evident from rising electricity costs per unit since the last half a decade! And mind you, I have not even started talking about the indirect cost one has to bear with respect to increased fuel prices and food prices – both of which have a direct correlation with power supply and power cost.
What makes Coalgate and similar scams different from their counterparts is the way they impact the common man’s life. For one single Coalgate to happen, the entire social cost is forced down the throats of the poor. For the poor, it is a perennial battle for their lives and livelihood. And that too without even getting to bear the fruits in the process – thanks to the artificially created power shortages. It is no secret that without power, the fruits of development cannot percolate down, which otherwise could have enriched the lives of families living below the poverty line and helped them to climb up the social ladder.
So it is not just about the crores that get swindled with every such Coalgate scam; it is more about the social costs that the nation bears... costs that have a wider impact and almost always go unnoticed.
Arindam Chaudhuri is a management guru and director of IIPM Think tank.
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