Infrastructure in Ruins

Lok Sabha Elections 2004

Campaign Booklets

Under BJP Rule:

Infrastructure in Ruins



Privatisation of generation and distribution and subsidising the multinational companies such as Enron and local monopolies such as Reliance and Tatas, while raising the tariffs for the common consumer, has been the major “achievement” of the Vajpayee Government. In the last five years:

·        Power rates have shot up by 2-3 times for consumers, particularly the low-end consumers and those living in rural areas.

·        The rural electrification program has fallen far behind, with 42-44% rural households being without electricity; in the 9th Plan period (1997-2002), an abysmal 11,200 villages have been electrified as against 120,000 in the 6th Plan and 100,000 in the 7th Plan.

·        Poor addition to generating capacity in the 9th Plan period -- the Government sector, both state and central, added only about 13,500 MW as against 21,000 MW added during the 7th Plan. The additional 5,643 MW added by private sector is largely naphtha and diesel based and produces power at very high costs -- more than 2-3 times the average cost of power produced by govt. run State Electricity Boards (SEBs).

·        Encouragement to private powers, with guaranteed 16% rate of return on the Enron model.

In the Enron case, the NDA Government’s record stands thus:

·        During its 13-day stint in 1996, it gave a sovereign guarantee to Enron without which the project would not have taken off.

·        The BJP Shiv Sena Government in Maharashtra first scrapped the project and then gave it an even bigger second stage.

·        Once Enron’s first stage came on-stream, Enron power was found to be 3-4 times (Rs.6.00 per unit) more expensive than that of Maharashtra State Electricity Board power.

·        After the scrapping of the contract by MSEB, the NDA Government has done nothing to save the Indian financial institutions – IDBI, IFCI and SBI – who have either given loans or guaranteed Enron’s loans to the tune of Rs.10,000 crores!

The balance sheet of privatisation of distribution of power that the NDA Government is pushing:

·        The Kanungo committee set up by the Orissa Government has termed privatisation of the Orissa SEB a complete failure.

·        Prices of electricity have gone up for consumers in Orissa by 2-3 times without any improvement in supply.

·        One of the companies AES has quit, forcing the Orissa Government to step in and take over its operations.

·        The state owned Gridco continues to subsidies other private companies, and is incurring huge losses, much higher that the earlier losses of the Orissa State Electricity Board.

·        The Delhi Government privatised the Delhi Vidyut Board by handing over its assets to Tata and Ambani – Tata Power and BSES (now Reliance Power).

·        In the first year of its operations, the subsidy provided by the Delhi government to Tatas and Ambanis is Rs.2,600 crore, more than twice the highest loss suffered by state-owned DVB earlier.


The NDA govt. has encouraged private operators, particularly Reliance, at the expense of the govt. run telecom companies. The sops offered to private companies:

·        Forego the license fees from the private operators to the tune Rs.50,000 crore over the next 10-15 years and changeover to a revenue sharing arrangement.

·        The Government allowed private operators to violate the license terms and conditions. As a result private operators have fulfilled only 10% of their rural commitments without any penal action.

·        The Government allowed Reliance to offer mobile services without a valid license for almost two years. The penalty for this blatant violation of the license terms was judged to be a paltry Rs.485 crore.

·        In order to compensate other private operators, particularly the cellular lobby, the revenue share of the Government was reduced -- a largesse of nearly a 1000 crores. The cellular operators “repaid” this favour by almost immediately raising the calling charges for the consumers in a blatant display of cartelisation.

·        VSNL, with a cash reserve of more than Rs. 3,000 crores, was handed over to Tatas for less than this amount. Worse, the money was borrowed from public sector banks and financial institutions. Tatas proposed to immediately siphon off Rs.1200 crore from VSNL to other Tata companies.

·        Another major favour to the private operators was the delaying of the launch of mobile services by MTNL by 4 years and by BSNL by 7 years. Even after this delay, BSNL is now poised to become the leading GSM mobile service provider.

·        The promise of National Telecom Policy 1994 under which the private sector was allowed into basic services, was that it would lead to connecting all villages by the 1997. Even 6 years after 1997, one third of the villages are not connected to the telecom network.

How have the private operators, who have been favoured by the BJP led NDA Government done in comparison to the state owned sector?

·        The total number of telephones provided by all the basic private service providers is 1.07 million (March, 2002). BSNL and MTNL have added more than 20 times that number telephones in the same period, (22.986 million, 97-02.

·        In Village Public Telephones, BSNL had provided in the period 1997-02, approximately 2.06 lakh Village Public Telephones as against only 8 thousand by the private sector. Even here, it is to be noted that BSNL fell short of its target of 2.79 lakh Village Public Telephones.

The BJP led Government’s policies have also favoured the well-off consumers at the expense of the low-end consumers.

·        With the slashing of long distance charges, the bills for the richer segment of consumers have come down by 50% to 70%.

·        In contrast, the bills of the low-end consumers have doubled with increased rentals charges, reduction of the pulse rate from 5 minutes to 3 minutes, and reduction of free calls.

Transport: Railways and Roads

The key problem in the transport sector in India has been the complete neglect of the Indian Railways by the NDA Government. In spite of the railways being 4 to 8 times more energy efficient than road, the NDA Government has starved the railways of investments. This has led to a soaring oil import bill, with oil imports now accounting for 40% of all our export earnings. The railways today carry 45% of the total freight in the country including 89% of the 8 major bulk commodities, which constitutes the core sector of the economy. The high-density corridor connecting the four metros, Delhi Mumbai, Chennai and Kolkata – the Golden Quadrangle – comprising of 16% of the network, carries 65% of the freight traffic and 55% of the passenger traffic -- is already saturated and unless augmented, will lose out to the road sector.

The neglect of the railways can be seen from the following:

·        For the first time in its history, the railways did not pay the Government of India dividend in 2000-01 and 2001-02.

·        Track renewal and maintenance are being delayed; railway tracks with cracks and other defects are being left unattended.

·        Even worse, after the steady decline of accident rate per million train kilometres from 5.5 in 1961 to 0.57 in 1996-97, the figure has been rising and currently stands at 0.65.

·        The share of the railways in the total transport outlay has also continued its steady decline, from 10.3% of the plan outlay and 53% of the transport sector outlay in the 4th plan to 5.3% of the plan outlay and 37% of the transport sector outlay in the n the 9th Plan.

·        While the road sector has been encouraged by large investments in expressways, access controlled highways, etc., similar investments in railway tracks have not been forthcoming. This is leading to a further shift of traffic to road, with railways likely to be left only with the low cost bulk freight and loss making passenger traffic.

Even in the roads sector the focus of the NDA Government has been almost exclusively on the high visibility Golden Quadrangle project connecting the four metros. Other parts of the system have received insufficient investments. Though the Government has been making tall promises for investing in other parts of the system, the actual investments in areas such as the state highways, district roads and rural roads has been minimal.  Though rural paved roads have been promised before the elections, the promise seems to be without budgetary provisions.


During the NDA Government’s rule water availability for rural sections has not improved. The following have unchanged in the last five years:

·        Over 200 million people in "shining" India, by conservative estimates, do not have access to safe drinking water.

·        About 15,000 habitations in the country are reported to be without any source of potable water.

·        About 200,000 villages are only partially covered by drinking water schemes and the existing water sources in about 250,000 villages have severe problems of quality.

·        Urban water supply has become notorious for its irregularity and poor quality.

Water is a precious national resource, which should be under public control. Instead, scarcity and poor quality of drinking water has led to the emergence during the NDA govt.’s regime of a huge bottled water industry over Rs 1,000 crore per annum, with water being sold at the price of milk! Bottled water sold in the previous 50 years, was negligible -- bottled water sold in the past five years was worth over Rs.5000 crores!

Faced with growing shortage of water for irrigation in rural areas, and water scarcity in urban areas, reckless exploitation of groundwater is accelerating, increasingly by private and corporate parties. The NDA government has allowed groundwater to become the "property" of rich property owners, based on prescriptions by the World Bank. Trade in groundwater today is close to Rs.3000 crores, with around 50 percent of the urban domestic and industrial demand being met through groundwater.

The other major element of the NDA govt.'s response to the problem of water resources is the proposal for inter-linking of rivers, estimated to cost around Rs.560,000 crores. This grandiose plan has been initiated without proper feasibility studies and is only a fantastic gimmick. Most State Governments have already objected to diversion of waters from rivers passing through their States bringing into question where the waters proposed to be transferred to deficit areas will come from.