Wall Street Journal on India’s power failure and Gujarat

July 31, 2012


Ahmedabad, 31 July 2012

The holiest cow of the world media, leading American newspaper ‘Wall Street Journal’ has published an article on the collapse of the power grid in India. The article is titled as “More Power to India’s States, the collapse of the grid exposes the need for reform.”

Entire article is available on this link, but the last five paragraphs are conclusive, and they entirely contain the details on Gujarat model of governance and leadership of Shri Narendra Modi. Worth reading.

But perhaps the greatest display of political gumption and policy creativity comes from Gujarat in the west. Chief Minister Narendra Modi’s first victory was curbing the theft of power, one reason for transmission and distribution losses.

Mr. Modi’s real innovation, however, has been to set up a parallel distribution network to sell farmers electricity at competitive prices. Consumers can still access the old grid at subsidized prices, but they’re increasingly turning to the new one for stable supply.

Now Gujarat is the only Indian state that generates more power than it consumes. Consumer choice helps wean people off a de facto entitlement so that subsidized electricity can be phased out.

While not all Chief Ministers will be as bold as Mr. Modi, it’s clear that India’s states are the new laboratories for reform. National measures may still be needed to reshape the broader market, but the electricity crisis shows that state governments can respond to consumer needs better than New Delhi. So it makes sense to vest them with more responsibility to provide the likes of roads and bridges too.

The biggest lesson from the great blackout is that Delhi’s failures don’t necessarily doom the economy. Mr. Singh’s fecklessness may deprive India of power today, but federalism gives the likes of Mr. Modi the ability to take initiative. For India to overcome its slump, the states need all the power they can get.


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