The Political Economy of Agricultural Policy Reform in India

180 CHAPTER 11

1. Clash in core beliefs and central policy beliefs: As discussed in “Identify- ing Belief Systems” in Chapter 10, privatizing the energy sector is a policy area in which groups associated with the market-oriented paradigm and those associated with the welfare-state-oriented paradigm clash not only in their central and instrumental policy beliefs, but also in their core beliefs as to the roles of the state and the market. A public-sector reform model that adopts New Public Management approaches, as is currently pursued in Andhra Pradesh, constitutes a middle ground between the two positions. However, this model still runs counter to a core belief held by proponents of the market-oriented paradigm, who argue that the public sector in India simply cannot be reformed.

2. Interests of electricity-sector employees and other groups: Privatization obviously affects the interests of electricity-sector employees, who may lose employment and benefits and change some attitudes toward their work. The case of Andhra Pradesh shows that these concerns can be addressed in a negotiation process. Less obvious forms of political resis- tance may come from other groups that gain from mismanagement and corruption under the current system.

3. Farmers’ interests: In principle, electricity could be supplied at a sub- sidized rate or free to the agricultural sector, even if the energy sector were privatized, if the state compensated the utilities. Still, the private sector might give low priority to the agricultural sector (see below).

4. Food-security concerns: Under the current system, political decisionmak- ers in Punjab and Andhra Pradesh instruct the utilities to give priority to agricultural supply in critical phases of crop production, including drought periods. Considering that more than 50 percent of India’s food crops are produced with groundwater irrigation (Dubash 2007), this practice not only serves the interest of farmers but also supports food security. Because political influence over distribution priorities is obviously more limited in a privatized model, this is a concern for those groups who believe in food self-sufficiency as a political goal.

Regulation and State Ownership of Bore Wells. The proposal of the Andhra Pradesh Commission on Farmers’ Welfare to bring all bore wells, including those established by the farmers on their fields, under state ownership is likely to provoke major resistance, even if the farmers are compensated. Moreover, state management of bore wells involves considerable administra- tive challenges and may well lead to mismanagement and corruption. Another approach to limiting groundwater extraction is simply to restrict groundwater extraction by law or regulation. However, since bore wells are privately owned, it seems impossible to implement this option. The APWALTA takes

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