ELECTRICITY SUPPLY: EVOLUTION AND REFORM 111


The association was mostly led by large-scale farmers who demanded better terms of trade. The chief minister first responded by ordering the police to fire on the farmers, but later he introduced a progressive tariff structure that made electricity cheaper. Indeed, under this scheme free electricity was offered to small-scale farmers for the first time in India. The electoral promise of a flat-rate tariff by the Congress Party in Andhra Pradesh in 1977 may have led to support for similar policy decisions in other states (Dubash and Rajan 2001). According to K. Gopal Iyer (personal com- munication, 2006), the Tamil Nadu Agriculturalists Association had never demanded “free” electricity; neither had they demanded special concessions for the small farmers. Tamil Nadu’s chief minister, M. G. Ramachandran, how- ever, adopted this policy with the intention of splitting the farmers’ move- ment while at the same time “playing the card of equity” (Iyer, personal communication, 2006). As in Andhra Pradesh, electricity subsidies in Tamil Nadu were part of a wider set of “populist” welfare policies introduced by Ramachandran. As Suri (2004) points out, Ramachandran, also a former cin- ema idol who became the leader of a regional party, was in many ways a role model for Rama Rao in Andhra Pradesh.


The introduction of electricity subsidies and the abolition of metering was, however, not limited to these two states and their “populist” leaders. As Dubash and Rajan observe:


Subsequently, political leaders in Maharashtra, Karnataka and elsewhere began to view the entitlement per se as a remarkably effective political device, in part because of the growing political power of backward rural communities and the rise of a middle-class farmers’ movement. In many states, a flat-rate tariff, rather than free electricity, was offered, but in either case, existing meters were no longer monitored or were simply removed and returned to the SEBs. This was driven in some measure by outright opposition to metering but also by the high transactional costs of such non-remunerative monitoring and meter installations for new connections. (Dubash and Rajan 2001, 3369)


1989–2004: Efforts to Reduce Electricity Subsidies and Reform the Power Sector


1989–94


In spite of the welfare and “populist” policies that Rama Rao’s government implemented on a large scale between 1983 and 1989, the party lost the 1989 elections to the Congress Party. After 1991, the Congress Party, which then ruled both at the national level and in the state, started to engage in economic liberalization. Even though the TDP manifesto of 1983 had already


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