The Political Economy of Agricultural Policy Reform in India

ELECTRICITY SUPPLY: EVOLUTION AND REFORM 123

ties, that is, the Congress, BJP and the Akalis, approved market reforms in principle, but made electoral promises against these reforms. In these elec- tions, votes were sought for subsidies and people have voted for it.” The Akali–BJP alliance won the elections and subsequently introduced free electricity to all farmers, together with free canal water, in spite of the state’s precarious financial situation. As a consequence, the World Bank stopped funding projects in Punjab (Deccan Herald 2005). The coalition gov- ernment was led by Parkash Singh Badal, himself a large-scale farmer. Dur- ing the time of the Akali–BJP rule, from 1997 to 2002, the area irrigated by canals decreased by 40 percent, which added considerably to the pressure on groundwater resources (World Bank 2003b, 43). Unlike Andhra Pradesh and other states, Punjab did not adopt a policy to devolve authority in irrigation management. The government developed a state water policy in 1997 and drafted the Punjab Groundwater (Control and Regulation) Act in 1998. This measure, however, remained in draft form as of 2007.

In the power sector, efforts were made to attract IPPs to remedy the grow- ing shortage of power generation in the state, a typical phase 1 reform activ- ity. The Punjab State Electricity Regulatory Commission (PSERC) was created in 2000. Since then, the amount of the electricity subsidy to agriculture has been explicitly stated in the state budget, and compensations to the SEB have been made. No steps toward unbundling were undertaken during this period.

The 2002 Elections

As in the 1997 elections, all parties in the 2002 elections promised subsidies. In addition, the campaigns were rife with personal attacks and allegations of corruption, nepotism, and mismanagement. The electoral battle between the Akali–BJP alliance and the Congress–CPI alliance grew so heated that the Election Commission warned both parties to exercise self-restraint (Kumar and Kumar 2002). As in Andhra Pradesh, farmers’ suicides and the agrarian crises were important topics. A representative survey showed that out of the 65.5 percent of the respondents who had heard about the suicides of cotton farmers in Punjab, almost 60 percent either held Badal’s SAD-led government squarely responsible for it or blamed the SAD along with the national govern- ment, which was aligned with it (Kumar and Kumar 2002). Nevertheless, the policy of the Badal government to supply free electricity to all farmers turned into a controversial topic. The measure was criticized as populist, as contributing to the fiscal deficit, and as serving the rich rather than the poor. For example, Tavleen Singh, a noted columnist and political reporter, was quoted in an article in the Tribune as saying: “India’s tragedy is that we continue to elect Chief Ministers who believe that short-term populist measures are more important than doing real good to the state they rule. So

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