Journal: Understanding Modi and Demonetization from Gujarat and Jyoti Gram Yojna

Recently there is lot of discussions around the outcome of the demonetization decision taken up by Modi government on its first anniversary. Few of the main point of criticism are

1.) He did not consult and listen to real economists before imposing this high cost whimsical idea on citizens.

2.) It did not have any real effect on black money. The situation in the black market has returned to same condition as earlier. People who dealt in such transaction have continued their ways. Move to digital money is an after thought to hide this failure.

3.) Modi is arrogant, stubborn and don't admit his mistakes regarding failure of this scheme.

I will try to respond to these points with my little bit of understanding.

A disclaimer first. I don't claim to be unbiased person. I have obvious biases towards Modi and BJP. I have impulsive dislike to "Economists" because theirs is not a real science. Most economists are in fact political activities who hide their activism behind a mask of academics, intellectual, scientists, 'Economists'. Dr. Manmohan Singh, Prof. Amartya Sen, Jagdish Bhagwati, Kaushik Basu, Raghuram Rajan etc. all have contributed to my this dislike and distrust on their tribe. Enough of distraction, getting back to my main point.

Today, I will try to refute only the first point. Later points, when time permits or if I have enough motivations left. I use a personal anecdote to make my point.

It was year 2001, when I was a fresh graduate with masters in electrical engg. from a very reputed IIT. I joined an R&D dept of a big MNC in Vadodara, Gujarat. The Vajpayee government had recently introduced a scheme called Accelerated Power Development Program (APDP) which was later called APDRP. This link give you more details about the schemes. Background of APDRP

Being in the same sector and in R&D located in Gujarat, I was excited that now something positive can be expected regarding poor electricity situation in the country. The progressive states likes Karnataka and Andhra Pradesh (Under reformist CM Chandrababu Naidu) immediately took up the schemes employing technical consultants and research organizations to prepare plans that would help improve their power systems. My organization was actively involved it these studies. The result was after the studies there were lot of suggestions about employing good technological solutions to improve efficiency and reduce losses. These methods were already being used in advanced countries like US and Europe. There was no doubt about the effectiveness of these solutions. Only thing that stopped us was requirement of huge investment.

The next step was, getting funds and executing the projects. Due to APDRP there was not dearth of investment. One could get lot of money, government was willing to invest. Based on this our company (MNC) setup an new manufacturing unit within short span of one year, got new technology from US, just to meet the demand from these two states of Karnataka and AP. The manufacturing was in Gujarat. Lot of such companies made huge money by supplying these new highly efficient devices, executing the projects. Many consultants made lot of money through guiding the execution. Everything was nice, honest business. There was demand and corresponding supply. These tow states were going to see their power system improve a lot.

What was happening in Gujarat then? I was waitng for such projects in Gujarat, just because I staid in Gujarat and wanted its system to improve too. The Gujarat Government took a different approach. Instead of investing in deploying high efficient modern equipment they took funds to 'segregate feeders' in rural area. To me it was like pouring good money after bad money. Not new technology, Gujarat plan was to build same kind of system that was existing, but just duplicating it.

To explain in simple terms what it meant was this. There is a small town called Padra near Vadodara. There is one road that already connects the two places. That road is in bad shape today. Plan of Karnataka and AP was to improve this road and make is more smooth. Obviously a very nice plan. Plan of Gujarat was to construct another parallel road using the same old technology that had resulted in initial bad road. But there was one difference, the parallel road will not be connecting to Padra town, but it will go to agriculture fields of Padra town. The old road will now be serving exclusively to residential area of Padra town.

An obviously stupid idea. No economist or engineer or consultant would suggest this. It did not make any sense. The 'correct' way is to go to periphery of Padra on a common road and then make smaller streets that takes one to fields and residence.

I was very disappointed at this stupidity of Gujarat government. It was against the basic principles of electrical engineering to construct two parallel feeders where one could have served the purpose.

The is a story that this scheme was suggested to CM Modi in a meeting by a junior engineer of Gujarat Electricity Board. The seniors did not agree with this, but CM Modi instantly liked it and ordered it to be implemented immediately. The funds were to be obtained from APDRP. Everybody, every 'knowledgeable' person was against this 'stupidity'. No body, no senior engineers, no technology experts, no economists were consulted. It was just stubborn Modi who realized that this thing made some sense. Gujarat went ahead with it.

The scheme was as simple as this, "In a village, there are about 500 houses that use electricity but there are less than half a dozen farmers who use electricity in fields located adjacent to the villages. We have attempted to make a differentiation between those who use electricity within the villages and those who use it in the fields," Modi said.

But it resulted in dramatic turn around. Agriculture power was unmetered, no body paid any bills. Hence GEB also did not supply good reliable power to them, as it was a loss making proposition. Now, however the residential feeders get 24 hours power, and only agricultural feeders got 8 hour power.

There are other aspects also but the main reason for 24x7 power in all villages in Gujarat is this feeder separation. A low tech. 'stupid' solution. Now in 2017 the supply to agricultural feeders is also 14 hours per day. It can be made 24x7 too but there is no need for such power in agriculture.

Slowly in 2006 Modi introduced compulsory metering of agricultural power also. It turned all farmers against him. But their protests could not be sustained as villages got good electricity there was no support for these whining farmers. Everybody realized the importance of electricity and Modi was able to convince them about common sense of paying what you consume. Moreover, after making all villages get 24x7 power and taking GEB in profit, the Government is now doing the gird modernization with new technology using self generated funds.

The power turn around in Gujarat is captured here. The Transfomer.

In between there were lot of police cases, putting farmers who indulged in power thefts in jail etc. There was great social upheaval but Modi staid his course facing these criticism. If you remember the 2007 assembly election was fought around farmer agitations.

What is the state in Karnataka and AP now? They are still doing studies, evaluating the benefits in loss reduction and increase in efficiency due to APDRP schemes. The consultants are still earning money churning report after report, congratulating their implementation of the projects pointing out reduction in losses by 10 % - 15 % etc. Meanwhile Bengaluru still faces 3-4 hours power cut daily!

In nut shell Karnataka and AP power system did improve, but it was not as dramatic and as noticeable as the 'unscientific' Jyoti Gram scheme of Modi implemented against the advice of all senior experts.

I became fan of Modi in 2006, realizing his resolve in improving electricity sector of Gujarat. A lesson I learned, that there cannot be 'technological solutions to sociological problems'. What Modi realized and rest of us overlooked was that it was not a question of investment but a social malice of practice of power theft and people not appreciating the value of electricity. Once he showed them what could be possible with 24x7 power, his path became easy. Now he had free hand to implement technological solutions too. The first solar park in India was set up in Gujarat at a tariff of Rs 15 per kWh. Yes, people of Gujarat are paying this much amount for solar power of Charanka and they will pay for 20 years. Short sighted people will keep on crying on this 'loot and theft'. Others realize the value of this investment in future of the society.

I wanted to tell through this anecdote is that there is a parallel in Demonetization and Jyoti Gram Yojna. Let us see how it pans out.

Till then all experts, economists, intellectuals should keep on asking for Modi's resignation. For he is stubborn, does not listen to their advice and never gets perturbed by manufactured agitations.