Sucheta Dalal :Consumers arise!
Sucheta Dalal

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Consumers, arise!  

January 25, 2000

As consumers we celebrated the Delhi High Court judgement last week against the Telecom Regulatory Authority of India (TRAI). The court virtually took over the independent regulator's job and ordered cell phone operators to reduce tariffs and rentals. It demanded that the hefty reduction in license fees wrangled by cellphone companies from the political establishment should be passed on to the consumer. And it was implemented within a day.

The court also stalled the introduction of the Calling Party Pays (CPP) regime saying that TRAI could not decide on inter-connection charges between land phone companies and cell operators. Ironically, CPP is an accepted norm around the world. In India this too was sought to be distorted by imposing in on the top of a steep increase in landline charges and interconnection charges, placing an unfair burden on landline users.

Telephone users have been extremely lucky this time. Usually, our voice is drowned out by government and the big corporate houses because we are disorganised and have no funds for a sustained fight. Few Indians realise that the shift towards a market economy requires us to be alert and to fight for our rights and very few of us are willing to spare the time or money for such battles.

But we consumers cannot always depend on the courts. We need strong independent regulators in power, telecom and insurance.Only public pressure and participation will ensure that they are empowered to function efficiently, independently and equitably.

The TRAI has not endeared itself to telephone users, but the government's attitude to it and other independent regulators and commissions is more worrisome.

The government has to pick the right people to head these bodies and not use the first whiff of controversy to truncate their powers and responsibilities. The bifurcation of the TRAI's regulatory role from its judicial function is necessary, but the declaration that its powers are merely recommendatory and not binding on government is distressing.

The TRAI, it seems, is already on the road to becoming another toothless bureaucracy. The attitude of the government towards independent and uncompromising persons is clear from the manner in which it treated the Disinvestment Commission.

P Chidambaram as finance minister had slashed its role to a recommendatory one and its excellent recommendations were simply ignored. This government allowed the Commission to die an unceremonious death, even when it had failed to meet disinvestment targets and all attempts to sell public sector equity - whether through a GDR issue (GAIL) or through cross-holdings.

The issue here is not merely government callousness and double-speak but about who pays the price for the bumbling and corruption in government. If the finance minister does not find yet another shortcut to disinvestment, the budget target will not be met and he will have to find other ways to raise revenue. The simplest way to pick the taxpayer's pocket.

This can only be stopped by collective consumer action. Two areas which need careful watching are the independent regulators set up in power and insurance. The courts are not always going to be aggressive and supportive like the Delhi High Court was in the telecom case. The power sector is a good example of this.

Power deals have been negotiated by state governments without the slightest attempt to assess true shortages or to address tough issues such as transmission and distribution losses, theft, inefficiency and non-payment of dues by other public sector undertakings. Also the Ordinance on Electricity Regulatory Commission, just like the TRAI, provides almost no role for protecting consumer interest.

The Consumer Education and Research Centre (CERC) of Ahmedabad has appealed to the Union power minister and members of Parliament to amend regulation so that consumers can approach the regulatory commissions and demand accountability and efficiency on the part of the state power utilities.

In fact, CERC has already launched a multi-pronged protest against the hike in power tariffs. It has served legal notices to the Ahmedabad Electricity Company and the Gujarat Electricity Board to withdraw the tariff hike and for failure to protect consumer interest.

The substantive demand by CERC is that the state can no longer unilaterally increase tariffs without taking consumer interest into consideration and proving to their satisfaction that other measures to increase efficiency and to reduce thefts and wastage have been implemented.

Other states which backed very expensive independent power projects are now hiking tariffs as well, and we consumers better prepare for battle. These states had justified the expensive power by projecting huge shortages.

Enron's project in Maharashtra is not only the most expensive, but also a brazen example of how both the BJP and Congress governments fudged power availability statistics to project enormous shortages. They used these to provide multiple guarantees to Enron, yet the commissioning of a 785 MW first phase alone has blown the lies.

The cost of power turns out to be exactly as expensive as various non-government organisations (NGOs) had claimed it would be, and the state has a hefty power surplus. Yet, 26 odd cases filed against the project were dismissed by the courts without getting into details of the manner in which the project was cleared.

The Maharashtra State Electricity Board is backing down far cheaper power produced by the Tata Electric Companies (TEC), again, exactly as the petitioners had claimed it would.

The corporate sector which anticipated that power tariffs would shoot up have quickly set up captive consumption units, since this power is now going to be cheaper than that supplied through the grid.

The government has little option but to load the burden of increased costs on to the domestic consumers. If it has not happened so far, it is because of a lucky break. The change in government at Maharashtra, and the threats by Congress Chief Minister Vilasrao Deshmukh to re-negotiate the second phase has stalled the hike. But this will not last. The feebleness of Congress protests suggests another political deal followed by a tariff hike.

For readers interested in the Enron saga, Abhay Mehta's book Power Play (publisher Orient Longman; price Rs 195) documents the story of brazen clearances in an extremely readable manner and publishes crucial documents to show how the clearances were rushed through without study. Mehta along with Pradyumna Kaul and the CITU union had unsuccessfully fought Enron in court.

The battle is now against tariffs and better accountability. But any sustained fight and litigation costs money and public support. We do not have to sit back and suffer the consequences of corrupt government deals and inefficiency, but unless a large number of people are convinced of this, nothing will change.

Consumers have to become an appropriately strong and vocal lobby capable of embarrassing the political establishment. This can only happen through collective intervention and action and educating the less knowledgeable about economic implications of government decisions. It will be a long struggle, but it has to start gathering momentum today.

-- Sucheta Dalal