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The political economy of energy transitions in two Western Indian states

Dr. Siddharth Sareen gave a presentation on the political economy of energy transitions at Bergen Energy Lab on Tuesday November 20th.

Siddharth Sareen
Photo:
Anja Lindgaard Molnes

Sareen talked about important political and economic drivers and barriers for energy transitions. In India, the electricity distribution sector is modulated indirectly by the central government’s interventions and more directly by the broader political economy at the state level. Centre-state politics, electoral politics, state finances, the structure of the state economy, and developments in cognate sectors such as agriculture and transport influence sectoral trajectories in each state.

- The political economy within each state’s electricity sector is characterised by the demand for service quality, the demand for subsidies, available financial space and the cost of supply. Their interplay with a wide range of sectoral reforms determines electricity distribution outcomes such as service quality, the financial health of the sector, and environmental quality, explains Sareen.

In his presentation, Sareen gave a comparison between two different Indian states, Gujarat and Rajasthan.

- The two Western Indian states, despite their similar geographies and partly comparable demographics, differ vastly in sectoral performance. These differences can be traced to contrasting decisions on the manner of sectoral unbundling, energy infrastructure priorities, investment in renewable energy, and administrative support to implement policies, in response to political economic pressures at critical junctures over the past quarter century, Sareen elaborates.

Sareen explains that Gujarat’s relative success can be credited to gradual unbundling with coordination between the finance and energy departments; strategic interventions in energy infrastructure to prevent electricity theft, backed by administrative support for the field staff; strong political support for renewable energy uptake; competence based human resource promotion mechanisms; and a reputation for being a business-friendly region.

- Demonstrating positive outcomes from early successes has made it easier to exercise political gumption, says Sareen, and continues:

- By contrast, Rajasthan’s relative failure can be credited to lack of transparency in book-keeping despite unbundling; sustained low tariffs for political purposes despite high supply costs; resistance to stopping electricity theft and associated losses due to political patronage; yet it has used its favorable geographical conditions to progress on solar energy uptake on better financial terms than the first-mover state.

This work evidences the relevance of understanding political economic drivers of energy governance under sectoral transition. Addressing the electricity sector to secure improved outcomes is an easier task if these drivers are recognised as being part of how governance functions.

 

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