YEAR 2004-05 YEAR 2002-03 YEAR 2001-02 YEAR 2000-01





1. One of the biggest challenges before us today is that of poverty eradication and economic development to achieve it. There are many issues, which fellow consumer activists will be raising, and CUTS would like to focus on the people’s involvement in power sector reforms.

2. As government’s policy, a growth rate of atleast 9% is being targeted to sustain growth and economic development. Though the current growth rate is only about 6% with a not very healthy forecast. Be that as it may, one of the major factors in this exercise is reforms and liberalisation. One key area of reform is what we will be touching here, that of the power sector, because supply of quality power is crucial for all economic activities. There are several others too, but we will leave that for this memorandum.

3. The government has established a Central Electricity Regulatory Commission as well as many states have also established electricity regulatory commissions, so that there is better management of the power sector. It is indeed a welcome step. These commissions, as per law, are also required to involve consumer organisations in the process. At the same time, the sector is being either corporatised or privatised. If one looks at the changes which have been or are being brought in various states, one will get a widely mixed response.

4. However two of the major fears across the nation are:

  • that prices will raised beyond the paying capacity of the ordinary consumer; and
  • employees will be sacked.

5. This happens also due to some other factors. The two major drawbacks in this exercise are:

  • the lack of people’s involvement in the reform process; and
  • poor communication by the government(s) of the need for reforms.

6. If one takes the example of Orissa which had had the longest innings in the area, one will find that people’s involvement was either quite low or whatever interventions which were made by the consumer groups were hamstrung due to lack of resources. Secondly none of them have the resources to reach out to people in a systematic and sustained manner. Adding to the problem, the super cyclone in Orissa set back the process by far.

7. Let’s take the example of Andhra Pradesh, which has a very dynamic chief minister, the electricity rates were raised by over 120% in one go. That lead to severe unrest, agitation and social disarray. Genuine consumer organisations were not even invited for the consultations. The required public notice or a public hearing was not even done.

8. As a contrary experience, here let’s take the example of a well managed situation, that in Rajasthan. The electricity board has been split into five companies about six months ago. The government went to the press that not a single job will be affected, and also assured consumers that prices will not be raised arbitrarily. Not a day’s strike took place. Now the three distribution companies have proposed hikes of 15-17%. Public notices have been issued and a public hearing has been organised on 16th January. CUTS have done some homework and will be intervening in this exercise, with the goal of getting several commitments from the companies, which will benefit the consumers both in the short term and the long term.

9. Not only that, but CUTS has been involved with the issue for quite some time. CUTS has pushed the electricity board into developing a citizen’s charter and organised several surveys and meetings. On this issue, in the last three years, we would have interacted with the Chief Minister on no less than five occasions, and with the State Power Minister on seven occasions. They have been quite responsive and very encouraging. Furthermore, we have also established that consumers are willing to pay more if they are assured of a regular and quality supply of electric power. This fact has been carried by newspapers also.

10. We were able to do all this, because we have created a large network of over 300 (and growing) rural and urban consumer organisations in Rajasthan, with who we work on several issues. CUTS could do all this because of a sustained effort in professionalising the organisation. Established in 1983, with a zero-budget and all volunteers, our current budget exceeds Rs250lacs per annum with sixty five employees, many of who are economists and lawyers. Their salaries are not good as the private sector, but in line with UGC scales. Only those who are committed to making the world a better place to live in, do not get poached. We have three resource centres in India and one in Lusaka, Zambia, with plans to expand further.

11. All this was not to blow our horn, but to assert that as consumer activists, we are one of the best and unadulterated advocates for reforms. Secondly to build up an organisation like this, without any political patronage, it requires huge effort. The character of the consumer movement is also unique, because it seeks to protect the rights of the richest and the poorest consumer. We are probably the only lobbyists for the whole economy. The government unfortunately has not recognised that in its full measure as an essential input into making a success of the reforms process.

12. In the second instalment of his musings from Kurakom published on 3rd January, 2001, the Prime Minister has inter alia called, “[for] radical development reforms, which should encompass, besides economic reforms, administrative and judicial reforms. The most important component of these reforms is to fix transparent accountability at all levels and increase peoples’ involvement in monitoring the functioning of all agencies that impact on development. This is necessary to check corruption, which drains away… Development is too important matter to be left to bureaucrats alone. People must be empowered to not only demand results, but also to actively participate in the attainment of results”.

13. Indeed, the PM put across a proper prescription for success, very forcefully. Taking this as the encouraging support to our viewpoint, we submit:

  • The consumer movement must be resourced properly so that it can be an effective peoples’ movement, function as an intelligent watchdog, and act as a bridge between the people and the government.
  • Secondly, the government must communicate with people in their language about what reforms mean and how it will benefit them.
  • To do the above mentioned, the government must develop a scientific plan of action to do both by not only making budgetary provisions for meeting the expenditure, but by announcing its intentions, and sending out a strong signal to the people.

14. There are various ways to fund the consumer movement without taxing the exchequer.

  • Firstly, the Consumer Welfare Fund, which–with proper changes–can be utilised for the purpose. At the moment it is mortgaged to bureaucratic methodologies, therefore unable to meet with its goals.
  • Secondly, by approaching international and national donor agencies. For example, the UK’s Department for International Development, which is already funding the state governments of Orissa and West Bengal to bring in reforms in the power sector.
  • Another way is through a cess on the electricity bills, which would be credited to a special fund for use only by consumer organisations.

15. As we all know, electricity is one of the most crucial inputs in socio-economic development. If such a plan of action is designed and implemented, it will have spillover effects in other sectors too. If desired, we can submit a longer paper on this proposal, including a plan of action, for the consideration of the government.


YEAR 2004-05 YEAR 2002-03 YEAR 2001-02 YEAR 2000-01