Infrastructure Sector and the Withdrawal of the State

(Courtesy: Economic & Political Weekly: Volume XXX.P.2114/34/1995)

The “new” will always be far more evocative than the “old”, particularly as the old is visible as the present with all its ugly manifestations, warts and all, while the new has the unwrinkled visage of the future. The Government’s current policies clothed as they are in the garb of “new” economic policies, “reforms” and “liberalisation” have an instinctive appeal, never mind that the “new” is only the failed past, refurbished and presented in the Emperor’s new clothes.

The remarkable resonance of the Government of India’s policy with the Fund Bank prescriptions has been one of the striking features of the current economics of so called “reforms”. The major thrust of the Bank in the 90’s is the insistence that infrastructure services should be provided largely through the private sector. The new capital investments in power and telecom should be through private capital and the existing capital base in the public sector should be rapidly privatised. Further, the market should be the major instrument guiding infrastructure services, such services being looked at merely as commodities like any other, only being perhaps a little more important. And such policy suggestions carry with it the carrot and the stick — loans only to those who are willing to undertake a time bound program of privatisation through conditionalities The Indian Government has, in addition to the above, shown some differences with the World Bank — guaranteed returns on investments as one such “innovation” — an unerring instinct for the worst of both worlds. While the consumers are to be exposed to monopoly exploitation without any protection, the private investor will have full protection against the vagaries of the market.

World Bank and Restructuring Infrastructure

The World Development Report, 1994 on Infrastructure[i], (WDR ’94), is by no means the articulation of a new found set of convictions. In the Power sector for instance, the Bank had already formulated its current policy in 1992 [ii]— loans only for those recipients agreeing to whole sale privatisation. The WDR ’94 therefore has only brought the World Bank out of the closet and allowed its earlier more closely held views on infrastructure to be subjected to a more detailed scrutiny. Earlier, such policies as the World Bank would have liked all countries to pursue, could only be worked through willing instruments such as the Chilean Government of Pinochet [iii] which automatically limited their public advocacy. The WDR ’94 therefore represents the Brave New World of the 90’s, an increasingly dependent underdeveloped world, finding difficulty in retaining even a modicum of dignity before the imperious Bank.

It is important to note one issue that WDR ’94 does raise forcefully. WDR ’94 argues that the poor performance of the existing stock of capital already invested in infrastructure is development foregone. And as the capital stock rises, such loss is a significant proportion of future development. Bank’s analysis of why such a situation exists and its remedy is of course a theological one — privatisation will automatically solve such problems. The real issue that needs to be addressed is how the existing capital assets can be made to deliver maximally so that we do not have to capitalise to meet demand simply because of poor “maintenance”. In the Power sector today, we are unable to meet a peak demand of about 40,000 MW at the load end with an installed capacity of 80,000 MW. Obviously, increasing capacity without addressing such issues is to pump more into a leaking vessel.

In diagnosing the malady in infrastructure sector and suggesting remedial restructuring, the World Bank has worked out a set of concepts to provide the requisite theoretical underpinning. Undoubtedly, investments in infrastructure have to be more effective. The key, according to World Bank, is the introduction of competition in infrastructure and to liberate it from government monopoly. The World Bank argues for more innovative structures of delivery of infrastructure and making the system being more responsive to the stake holders. However, it ends by arguing that if the system is made responsive to costs and prices, it will automatically becomes more responsive. Therefore the argument that all infrastructural services should be run on commercial lines — strictly business to be run purely for profit. The argument for competition is however, built very thinly in the WDR ‘94 as competition is entirely artificial in infrastructure and has to be introduced through regulation rather than the market. Therefore, the admission by the Bank itself that competition and stake holders’ involvement could be considered indifferent to ownership. However, based on data available, of course only to the Bank, they conclude that only private sector can provide efficient infrastructure services. It has been widely commented that World Bank’s contention regarding the efficacy of private sector in infrastructure services is not supported any independent examination of Bank’s closely held data[iv]. In the absence of such an independent examination, there is little validity of such claims. The Indian experience with private investors in infrastructure does not bear out the Bank’s assertion. The Brazilian experience in the telecom sector before the formation of Telebras is also similar — after the total failure of private enterprises there, the Brazilian constitution of 1988 allowed only state enterprises to enter the telecom sector[v]. In order to buttress a weak factual position, the Bank propounded the concept of “contestable markets in infrastructure” against the generally held view of infrastructure as “natural monopolies”. Following this, the argument that the State should withdraw to a purely regulatory role and leave the actual running of infrastructure to private hands. There are certain issues that such theories do not address. Is it possible to have a market for infrastructure in the same way that there is a market for other commodities? Given the nature of infrastructure, it is far more likely to grow as either a monopoly or at best an oligopoly. If such a “oligopolistic market” does exist, what will be the impact of a supply constrained delivery of infrastructure on the price of such infrastructure. And finally, if infrastructure is seen as an independent commercial activity, what will be the impact of a high cost infrastructure on the development process as a whole?

The creation of competition in infrastructure is the underlying theoretical premise of the World Bank’s case for privatisation. It believes that infrastructure can be unbundled and large sectors within infrastructure brought under a competitive regime. Obviously, it would be difficult to sell the idea of a private monopoly in place of a public monopoly. Politically, it would be difficult to argue on the benign nature of private monopolies — the memories of the people are not that short that they would have forgotten that private monopolies are even more callous. In the packaging of private ownership, it is imperative therefore that it be sold along with competition. This would allow peoples’ alienation from large state monopolies to be channelled for private sector entry. Once this takes place, it is a matter of time before the entire infrastructure sector passes into private hands.

Withdrawal of State from Infrastructure and its Impact

The nature of class forces that seek to privatise infrastructure — the forces behind the Fund-Bank axis — has been analysed recently[vi]. Briefly put, it has been argued that there has been a growth of liquidity in the West due to a number of factors. This liquid capital seeks to appropriate cheaply assets created in the public domain — this is the thrust behind privatisation of infrastructure world over. In the third world, the additional impetus comes from the nature of demand. In the 90’s, the growth of electric generating capacity in the third world has overtaken that of advanced countries[vii]. Similarly, in telephone switches, with a coverage of more than one phone per family in the West, the demand there has virtually saturated. The manufacturers are therefore desperate to expand in the third world.

It is not necessary to repeat the above arguments. The examination here is focused on the implications of the Fund-Bank policies on the infrastructure — particularly power and telecom. The withdrawal of the State from infrastructural services has serious consequences for the entire economy and in redressing inequitable development both in regional and sectoral terms. Earlier, the provision of power, telecom, transport, irrigation, etc., had been considered pre-requisites for economic growth. Under conditions of large supply deficits, private sector investments in infrastructure do not lead to any competition but only to growth of monopolies and consequently high cost of services. The threat of withdrawal under conditions of shortages cause the state’s regulatory role to buckle The high cost of such services means that only a handful of people are able to avail of infrastructure facilities, widening even more the social disparities. Further, such investments tend to concentrate in areas that are relatively advanced, skewing the existing regional imbalances even further. With high cost of infrastructure, access to vital requirements for industrial and agricultural growth are further constrained, leading to increase of existing disparities and lower growth.. Construction of “safety nets” as advocated, are merely palliatives and no solution to such disparities The high cost of infrastructure make it difficult for the third world economies to be competitive internationally.

The arguments advanced above are not new. It was with this perspective that the state was forced to intervene in infrastructure services. In India, the power companies were largely in private hands and had very little will or inclination to expand the electric supply. It was in this context that the Indian State entered power development in a big way from the 60’s to enable industrial and agricultural growth. In Brazil, there were a large number of private companies that were active in the telecom sector. However, the abysmal quality of service forced the Brazilian State to intervene and create Telebras which finally took over the entire telecom services sector. In 1988, the Brazilian Parliament passed its constitution, incorporating the provisions that only the state and state run entities can offer telecom services[viii]. The South Korean example is also very similar where the  private sector in power generation had to be nationalised in the 60’s due to its repeated failures. The current World Bank solutions are therefore not a new perspective on infrastructure but the repetition of a strategy that had already failed earlier. The only new element is the proposal of unbundling infrastructure in each area and introducing competition.

The introduction of competition in infrastructure and privatisation will automatically ensure economic efficiencies hitherto lacking in the state run public utilities — this is the core of the Fund-Bank argument. The degree of competition is therefore crucial to the argument and unbundling of infrastructure is a pre-requisite to the introduction of competition. The utilities have generally been considered natural monopolies and competition has been historically absent in these sectors. The 80’s have seen a re-look at some of these fundamental premises and it is now being argued that competition is possible in these areas provided the state and regulatory authorities help in introducing competition. Anti-trust action in US and concepts like “transmission access” have opened the way for more players in power generation[ix], telecom[x], etc. In UK, ideological imperatives led to restructuring of the power and telecom sectors introducing a certain element of unbundling and competition. The restructuring globally of the 90’s, owe their origins to these actions in US and UK. We examine below the current reforms that are taking place in the advanced countries in order to examine the validity of such concepts for India and  the third world.

Utilities like power, telecom, etc., have clearly defined economies of scale. Further, the integration of a power grid makes it possible for smaller margins to be maintained in the system and a much greater security of the overall power system. Transmission and distribution networks have generally been a part of such vertically integrated utilities. The transmission and distribution networks require “right of the way” that had to be legislated by the state. It is easy to show that it is prohibitively expensive to duplicate an existing distribution network. The transmission system has very large economies of scale and costs of incremental increases are much lower than putting up independent transmission lines. The ownership of the transmission and distribution networks led to the growth of monopolies, as the owners of the networks could freeze out any new power generator. World wide, the power systems were such vertically integrated monopolies. In US these monopolies were private while in most parts of the world, they were state run utilities. The reforms in 80’s changed the above picture substantially[xi]. Under the Thatcherite reforms in UK, the distribution systems, the power transmission system and the power generators were unbundled into separate independent organisations[xii]. These organisations were then privatised. Any power generator could then get transmission access and supply to any distribution agency, or even to a large user. In US, the utilities were privately owned and were asked to provide transmission access to Independent Power Producers (IPPs) leaving their original ownership pattern and vertically integrated structure virtually intact. The introduction of a limited competition in generation in US and UK came only after the possibilities of technical efficiency improvements in the system through integration had been exhausted. The method chosen in US was to force the utilities to buy power at avoided costs. In UK, power quotations are given every day for the next day and the regional power distributing authorities choose the lowest bidders for their next day’s sources.

The Bank prescriptions and the current drive towards transferring public utilities to private hands have UK as the role model, even though the market in UK has not developed any real competition. It is dominated by two major generators — National Power and PowerGen. The resulting duopoly has resulted in high price of power and huge profits to the electric supply industry[xiii]. As the transmission and distribution are in any case monopolies, the case for competition exists only for the generators. In US, the utilities set up separate companies as Independent Power Producers. Under the PURPA legislation formulae of avoided costs, there were price advantages to newer generating entities if set up under the guise of Independent Power Producers. The case for competition having benefited the consumer is not supported by facts in either UK or US. The anger of the people in UK over the monopoly prices and consequent huge profits made by the power companies are a clear indication of this. Nevertheless, it has now become an article of faith for the Bank-Fund school and their monetarist followers that competition inevitably lowers the prices, even if it is not borne out by events.

However, while the consumer has not seen a lowering of power costs due to competition, the change of the ownership in the case of UK and examination of costs of new power generation in US as a fall out of PURPA Act, did lead to scrapping of nuclear power plants for both US and UK. It became clear that the vertically integrated monopolies had been able to hide the high cost of nuclear power, particularly in the capital servicing and decommissioning costs. Though UK and US had a highly efficient Electric Supply Industry based on technical parameters, they had significantly higher costs due to the uneconomic nuclear option they had both heavily relied on. As these costs were lumped with the rest of the system and not transparent, they could continue on this path for quite some time. The nuclear route was abandoned once the pricing of alternate sources of power became clear and the actual decommissioning costs were taken into account. In economic terms, though the productive efficiencies of the utilities were high, the allocative efficiencies were low. The allowing of limited competition in US and dismantling the existing structure in UK had therefore this unintended benefit. More so, when it is realised that the arguments for privatisation and competition had been based on increase of productive and commercial efficiencies and not allocative efficiencies. In UK, before privatisation it was expected that the Nuclear Power portion of erstwhile CEGB would be attract a large number of bidders. In reality, this proved the least attractive to the investors[xiv].

Monopoly in telecom has again its origins in the economies of scale and “right of the way” legislation created earlier. The telephone companies were vertically integrated monopolies, having long distance as well as local telephony. Apart from North America and a few isolated cases, the telecom sector was generally in Government hands. In US, it was with AT&T, who were also switch manufacturers, introducing an extra element of monopoly. The equipment manufacturing, the long distance and local telephony were all with the same company. The technological changes introduced in the 80’s was to change this picture. It became possible to ride piggy-back on a telephone network to provide other services — E-mail, data services, etc. These are called value added services. Technologically, it also became possible to provide voice telephony through other routes — wireless, satellites, etc. The monopoly power of the telephone companies was perceived to be a threat, particularly as more and more economic activity hinged upon the new communication methods. Unbundling was the first step. Value added services were offered by others either through leased lines or through dial up facilities. Separation of long distance from the local services was the next step. In US and UK, limited competition has now been introduced in long distance telephony. However, apart from very limited competition in UK, no country has allowed parallel local operators through local land based network. The economies of providing an extra connection in an existing network prohibit such a duplication, apart from the problem introducing another operator with its right of the way.

Competition in telecom services, particularly local voice telephony, is generally being introduced using alternate technologies. Thus wireless, either fixed or mobile (cellular), and the cable network can be used to provide competition to land based networks. As the telecom sector is regulated, the current regulatory and legal battles are for allowing cable operators to enter telephony and the telephone companies to enter cable TV using their existing networks. Here also, the Indian twist is to try and create a parallel land based local network — a wasteful duplication of scarce capital resources that has not been attempted even in advanced countries with much higher revenues per line.

Unbundling Natural Monopolies and Rebalancing Costs

The key to unbundling natural monopolies and introducing competition is regulation. Unlike other areas, where one can argue that regulation is required to prevent monopolies, in infrastructural areas, competition can only be enforced through regulation. The introduction of Mercury as a competitor to British telecom was a political decision of the Thatcher Government. Mercury is a classic case of artificial competition. It was created by Margaret Thatcher’s Government by bringing together Cable & Wireless, British Petroleum and Barclays’ Merchant Bank. It was a planned Government initiative. And to make it succeed, British Telecom was forced to carry all the social subsidies while Mercury secured a segment of most lucrative long distance traffic. Mercury’s competitive edge was really the British  Government’s intervention on its behalf — intervening in the market in order to prove that markets are best judges of performance. The US regulatory scenario is no different. If the regulator does not impose the terms for competition, the larger and more established operators would easily freeze out new entrants. Countries like New Zealand, who believed in their wide eyed optimism about the beneficial effects of open competition, have learned to their costs that without regulation there can not be any effective competition either[xv].

Similarly, in the power sector, there is a need to match the grid withdrawals with power generation. Co-operation is a necessity and the natural state for the Electric Supply Industry and competition can only be introduced with regulation[xvi]. Thus the regulator must ensure that the power generator is able to get access to the electrical network of others at a reasonable cost. Again, competition has to be introduced artificially in the system.

An essential part of introducing such regulated competition is to price each sector of infrastructural sector of services and disallow cross subsidies. As competition can only be introduced in certain parts of the hitherto integrated infrastructural services, each such segment must be priced independently. To make for fair competition, each segment has to be commercially viable and using revenues from one area of activity for another area of operation is forbidden by the regulator. Therefore unbundling infrastructure goes hand in hand with removal of cross subsidies.

Cross subsidies are not only a part of state run monopolies but provide the underpinning for all infrastructural services, whether private or state run. There is a sharp difference here between economic sense and commercial sense. If cross subsidies are withdrawn, the rural electrification or rural telephony is not viable. Yet providing these facilities to rural areas is not only a social obligation but makes for hard economic sense. The provision of cheap electricity and extension of the rural electrification program had much to do with the food security we have achieved today. Similarly, if the rural areas and semi-urban areas are connected by a good telecom network and provided with secure electricity supply, the resulting development would correct the gross regional disparities and the pressure on urban areas. However, none of these can be justified commercially from the stand point of the Electric Supply Industry or the telecom sector but have to be imposed externally on the infrastructure provider for larger economic and social goals.

The second sets of cross subsidies pertain to provision of low access costs for infrastructure. Commercially, the larger consumers should get a discount on electricity prices or on their telephone bills. However, generally, the infrastructure services are provided at low initial costs with higher costs for higher usage slabs. Thus telephone connections are provided at very low costs and the first few calls are charged at lower rates. Similarly, the electricity connection is provided at low initial costs. A commercially viable outlook would make the access costs so high that these would be the privilege of only the elite. This deprivation of services would be a fetter on development as larger and larger sections would lose their ability to compete for development. And this would ultimately hamper the growth of demand in these infrastructural sectors.

Let us take the case of telecom services. Currently, the local calls cost less while long distance calls cost more under a policy of cross subsidisation. This is not specific to India alone but is practised widely. AT&T did this in US[xvii] when it was a monopoly operator with the logic that a low telecom access is important in generating a higher traffic. A well-off son could call up  retired parents and generate long distance traffic only if the parents had telecom access. Therefore cross subsidisation to provide cheap connectivity is not an altruistic measure to help the poor or the needy but merely a mechanism of generating more revenue. When almost all homes are covered, this method of cross subsidisation does not have much meaning and a change in tariff philosophy  to reflect true cost is possible without affecting traffic volumes. However, with the extremely low telecom penetration that we have in India today, telephone access at true costs is bound to impinge upon the growth of traffic itself and possibly affect development. However,  unbundling of local and trunk operations as is being proposed under the new policy, will have to lead to a re-balancing of tariff — local tariffs will rise while long distance rates may go down. While cross subsidisation may be continued initially by giving the local operators a larger share of the long distance traffic originating within their network, there is little doubt that such subsidies will reduce over time leading to increase of local tariff. Mexico has seen a four fold growth of the local tariff after such unbundling[xviii].

The other disturbing element of the Fund-Bank policies is that one universal solution is being proposed for all infrastructural services for all countries irrespective of their stage development. Competition and privatisation for the underdeveloped countries on the pattern of UK is being advocated by the Fund-Bank agencies as a universal panacea. The advanced countries moved into selective competition in Electric Supply Industry and telecom after they had achieved the economies of scale and advantages of integration of their systems. It was only when the technical efficiencies of integration had been exhausted that the advanced countries looked towards competition in selected segments to improve economic performance. Here also, they have been careful to restrict duplication of resources, opening the sector out to competition either through alternate technical media or unbundling. Thus, in Electricity Supply, only generation has been opened for competition. In telecom, the major competitive avenue is to provide competition through either wireless or cable networks. Such competition has come about when there is already a very high degree of coverage and also revenue per connection.

The underdeveloped countries are distinctly different in this regard. In India, we have yet to achieve 5% of the telecom coverage achieved in advanced countries. The Indian grid is not only not integrated but even with this partial integration[xix], there is no grid discipline. Without first achieving even such basic milestones, how valid is it to talk of competition? In South Korea, the private utilities had to be nationalised not due to any ideological compulsions but out of a sheer inability to impose such discipline on them as required by the grid. To propose a dismantling of the state run infrastructure at this stage of development would seem foolhardy. Yet this is the solution that is being imposed on the state run infrastructure sector.

Efficiency and Infrastructure

The most important  reason for a lack of resistance to the dismantling of the state run infrastructure has been the complete alienation of  large state run enterprises from the people[xx]. This has led to the argument that state run enterprises are inefficient compared to private ownership. Amongst people suffering from a completely insensitive bureaucracy, any solution that promises to get rid of them strikes a ready chord.

Undoubtedly, if efficiency is to be measured in terms of customer satisfaction, the state run infrastructure services have not exactly covered themselves with glory. And if the policy of privatisation of national assets is to be reversed, measures will have to be devised which provide a better delivery of services. It may not take much time for the people to realise that a private monopoly has no reason to improve services either. This is the reason that while World Bank and other such agencies have held out UK as the model for privatisation, the British people have rejected privatisation as a solution to their problems of infrastructure. A number of sample polls have found that four fifths to two thirds of the people oppose the privatisation of public infrastructure in UK. However, this negative support for state run infrastructure can turn to positive support provided infrastructure services can be made more responsive to people.

Efficiency in infrastructure has various dimensions. One can define efficiency in terms of producing the maximum physical output at lowest cost. Or one can define it as maximum output on a given capacity. One can also define it in terms of commercial efficiency — earning a maximum rate of  return on investments. None of these are entirely satisfactory and if used singly can be quite misleading. Unfortunately, commercial efficiency is held by the dominant orthodoxy of the World Bank variety as the only criteria for measuring efficiency, others presumably being merely derivative of this “fundamental” efficiency.

An example will make the distinctions between various forms of efficiency clear. In the power sector, it is possible to produce power such that capacity utilisation is maximised. As we have generally a deficit in supply over demand, this is socially desirable even if it is not the most commercially sensible decision for the utilities. It is also possible to consider another measure of efficiency — producing power at minimum costs. Either way, the plants will be run most efficiently in terms of utilisation of existing resources. But in both cases they may still not be commercially efficient if the selling price is kept low. In such a scenario, producing power most economically will be less commercially efficient than producing less power at a higher cost with a high selling price. Considering that power supply is a monopoly as already discussed, commercial efficiency only means the ability to jack up prices rather than an efficient utilisation of resources. Obviously, commercial efficiency as the sole parameter produces systemic distortions without advancing either technological innovation or increased productivity.

In most countries, infrastructure services are monopolies in spite of Bank’s belief that competition can be introduced through unbundling. The regulator sets the terms of competition and also fixes the prices. Apart from UK, the prices are generally maintained on a cost plus basis, therefore ensuring that these sectors are commercially “efficient”. In UK, the regulator sets a five year price cap adjusted for inflation. In order to encourage technological innovation, the price cap is not fully adjusted for inflation and the companies can keep the extra profit if they can reduce costs. The net results of the UK pricing have been huge profits that the utilities have made in the last few years, increasing greatly the popular discontent against privatisation measures.

The costs plus and sliding price caps have been the only two measures that are used to calibrate efficiency in real terms. More esoteric measures have also been worked out to identify improvements in functioning of organisations. Depending on the ideological choice of the authors, these indices can be made to speak for any set of convictions. Thus in the case of UK privatisation, British Telecom is shown to have made “huge improvements” by these indices while British Gas and power utilities are shown to be on par with sate run services like Post and Railways[xxi]. A more reasoned approach may identify the cause of British Telecom’s improvement to the tremendous pace of technological change in telecom sector. This is particularly reinforced when it is realised that technological change in gas and power has been minimal. It would be interesting to compare the performance of British Telecom and Government run telecom services of other countries to see whether such improvements are due to reorganisation of British Telecom or due to more secular reasons. One would suspect that even the Indian telecom services would show similar improvements confirming that the growth of performance has been more due to technological changes rather than competition and privatisation.

The above is not to argue that efficiency is not a criterion in evaluating the performance of infrastructure but to point out the difficulty in finding one measure of efficiency. If we take the case of power, Plant Load Factor (PLF) is assumed to be a good measure of the physical performance of the thermal power stations. However, the Plant Load Factor depends on the load curve and with a load factor of around 60-65%, can not be more than this in a power surplus system. Efficiency may be measured by plant availability but this ignores whether power is being produced economically or not. And for the consumer, the continuity of supply and its quality are as important as the amount being supplied. Thus in a system, the consumer may be supplied 95% of his needs but face a number of interruptions. This may be considered worse than being given power equal to 90% of his needs but given without interruption except with advanced notice. The problem of finding a measure of efficiency is one of reducing a multi valued parameter to one specific number. In the case of World Bank and others, it is commercial efficiency while the Indian Government has tended to view the PLF as a sole criterion of efficiency. The consumers view of efficiency is quite different and is concerned with how well his needs can be met by the system and at what costs. A solution that provides either a high cost power or power cuts can not be attractive to the consumer.

In large scale re-organisation that is now being introduced in the power and telecom sectors, the concern for the consumer is not even on the agenda. The Electric Supply Industry is being restructured to make it commercially viable with guaranteed profits for the private investors. Similarly, the entire thrust in telecom is how to make private entry more attractive[xxii]. Obviously, the over riding consideration is one of ensuring profits, the consumer being a cipher. It is this mind set and these interests that are setting the framework for the reforms in the infrastructure sector. The task before us is not merely to revile the current reforms as pro monopoly and pro multi-national as they undoubtedly are, but also project the true agenda for reforms. In such an agenda, the workers and the consumers have to come together to chart out the future. The existing rulers have surrendered their prerogative to formulate future paths, mired as they are in policies meant to bankrupt the nation. The Government has started shouting from the roof tops of their inability to run the infrastructure sector. Instead of handing these over to private and foreign capital, why do not they agree instead that they are unfit to rule? At least history will then remember them more kindly then as a set of carpetbaggers who helped dismember India. Acknowledgement

I would like to acknowledge the contributions of Dr. Arun Ghosh and Shri M.K.Sambamurti in the formulations of this paper. A fuller account of some of the issues are available in their respective papers presented in Delhi Science Forum’s Seminar on Infrastructural Sector in the Current Context. A different version of this paper is also appearing as an introduction to the Proceedings of the above Seminar.


[i]. World Bank, World Development Report: Infrastructure for Development, 1994.

[ii]. World Bank, Aide Memoire: Orissa Power Sector Restructuring Loan, 1993.

[iii]. Renato Agurto, Regulatory Considerations: Chilean Perspective, IEEE Power Engineering Review, Vol. 14, no. 12, 1994.

[iv]. Adison de Oliveira, Electricity System Performance: Options and Opportunities for Developing Countries, Commission of European Communities, 1992.

[v]. Ronaldo Sa, Telecommunications in Brazil: The Role  of the Private Sector, IEEE Communications, Vol. 32, No. 11, 1994.

[vi]. Prabhat Patnaik,  “Notes on the Political Economy of Structural Adjustment, Social Scientist, Forthcoming, 1995.

[vii]. ABB and the Global Market, Goran Lindahl, IEEE Power Engineering Review, Vol. 14, No. 9, 1994.

[viii].. Ronaldo Sa, op. cit.

[ix]. T. Robert Woodward, William H. Dunn Jr., James V. Barker Jr., Impact of Open Access and other Structural Reform Policies on the Business Development of Electric Supply Industry: Report from United States, CIGRE Regional Conference, 1993.

[x]. Franklin Perez, The Case for a Deregulated Free Market Telecommunications Industry, IEEE Communications, Vol. 32, No. 12, 1994.

[xi]. Jane Roberts, David Elliott and Trevor Houghton, Privatising Electricity: The Politics of  Power, Belhaven Press, London, 1991.

[xii]. Andrew Holmes and Lucy Plaskett, The New British Electricity System, Financial Times Publications, 1991.

[xiii]. The Economist, March 11, 1995.

[xiv]. Jane Roberts et. al., op. cit.

[xv]. Aileen A. Pisciottia, Telecommunications Reforms: Options, Models and Global Challenges, IEEE Communications, Vol. 32, No. 11, 1994.

[xvi]. P.Purkayastha, Current Power Policies — an Invitation to Disaster, The State of the Indian Economy 1994-1995, Public Interest Research Group, 1995.

[xvii]. Wharton Economic Forecasting Associates, The Impact in the US Economy of Changes in the Long Distance Communications Market, Mimeo, 1987.

[xviii]. World Bank, op cit, 1994.

[xix]. P.Purkayastha, Arun Ghosh, M.K.Sambamurti and S.P. Shukla Infrastructural Sector in the Current Context, Proc. Seminar, Teen Murti, Delhi Science Forum, 1994.

[xx]. John Lyons, Privatising Electricity Supply Can not be Justified, Energy Policy, April, 1989.

[xxi]. The Economist, op. cit.

[xxii]. P.Purkayastha, The Power Brokers: Mortgaging India’s Power Sector, Delhi Science Forum, 1994.