By Sujai Karampuri
The first budget for the new State of Telangana is around the corner. Preparing this budget will not be an easy task, especially since there are so many expectations from the people of Telangana, who have always believed that creation of separate state will solve most of their problems. The reality is that we will not be able to address most of the issues in a short period of time. Therefore, solutions to most of these problems will have to wait. Having admitted the reality, we cannot fail to acknowledge that the first budget is quite critical – in the sense that it will set the tone and give guidance on how the new government is going is to translate its vision into reality.
It is quite important to divide these five years of government into various phases. The first two years should focus on the long term investments that would bring in structural and overarching changes. It should build the right kind of institutions and infrastructure on which other agendas can be implemented.
Essentially, the three pillars to focus on in the first budget are power, roads, and irrigation. There should be lop-sided allotment to these three sectors even if it means other sectors are not given their due justice.
As a nation India is not producing enough energy to sustain the growth of Indian industry – whether it is manufacturing, research or services. Per capita energy consumption of India is 1/5th of the world average. Human development index (HDI) has direct correlation with per capita energy consumption, and since we are one of most energy starved countries on the planet, our economy and standard of living continues to be a frustrating case.
Power failure is a regular feature in India, and this has exacerbated now in states like Telangana. Indian Industry continues to depend heavily on battery backups and generators. Power generated from diesel generators costs Rs. 14 per unit while the power from the installed plants costs only Rs. 4. Most Indian villages see power outages for most part of the day. Some towns and villages in India get only six hours of power per day. Indian industry continues to be concentrated in top ten cities of India because rest of India does not get adequate power.
Production of energy should be the number one priority for Telangana. As of 2012, the per capita power consumption in Telangana is 1200 kWh, higher than Indian average. To meet the current requirement itself, Telangana has to increase its installed capacity from the current 6000 MW to at least 12,000 MW. And this has to be done quite expeditiously, within a year. And going forward, Telangana has to increase its energy production to 36,000 MW to become an industrialized and developed state.
Throughout the world the energy production is primarily from Oil, Gas and Coal.
In the current context, the most pragmatic way to increase the capacity by nearly six-fold in Telangana is to install many thermal power plants using the coal reserves. CO2 emissions from India are only 1.7 billion tons per year, which is one twentieth of the world average of 30 billion tons/year. Renewable energy, though desirable is not viable to generate power to the entire state. In most countries it does not contribute more than 2% of the energy production. Even those countries like Germany which pursued these alternative sources quite aggressively have deemed it to be ‘on the verge of failure’.
It has already becoming clear to everyone in the state that electricity has become a major issue. The first budget should focus heavily on long term investments that make the state self-sufficient as a step one and also pave the way for much improved power production to make the state a world class society. In those cases where Telangana State cannot afford to build the necessary thermal power plants, it should borrow money or raise money through issuing of Telangana Bonds (SDLs) for infrastructure projects.
Returning from World War II having experienced the autobahns in Germany, President Dwight Eisenhower of United States signed the Federal-Aid Highway Act of 1956 that created 65,000-km national highways to create efficient roads to remove the traffic jams and to enable “speedy, safe transcontinental travel”. The advocates of this road system who considered it “essential to the national interest” also had a defense objective in mind to permit quick evacuation in case of atomic attacks. Reckon this – the most capitalist of the countries created the most socialist of the agendas and implemented it by infusing USD 26 Billion taking care of 90% of the expenses. The new interstate highways became ‘freeways’ enabling high-speed driving with no intersections Considered “the best investment a nation ever made” the interstate highway system has profoundly changed the economy and the society of United States. It created one of the greatest economies on the planet, the most thriving and vibrant, and in the process created the concept of suburbs by which almost any family could afford a house. The highway system distributed the economic centers across the landscape. Take a look at this – a small suburb called Harrison in New York houses MasterCard and Pepsi, Peoria in Illinois houses Caterpillar, Bentonville in Arkansas houses Walmart, while Omaha in Nebraska houses Warren Buffet’s Berkshire Hathaway. Hundreds of major corporations are based in small cities and towns of United States. This is possible only because of the efficient highway system. Compare this with Indian situation – almost all major corporations in India are based in one of top six cities in India.
In addition to contributing massively to the economy, the highway systems decongested the metropolitan cities, allowed for suburbs to appear everywhere, allowed for ordinary families to own houses, and in the process allowed for parks, sports centers, and better quality of life.
Telangana State should envision a state-wide interstate highway system without intersections, and ring roads around major towns. It should invest in public transportation which include bus systems, fast-trains connecting cities, and metros within the cities. Telangana State should focus on road transportation system either through direct investments or through private partnerships. If necessary it should borrow money or raise money through issuing of Telangana Bonds (SDLs) for infrastructure projects.
One of the core reasons for formation of Telangana was to address the problem of irrigation in the new state. Though Telangana receives adequate rainfall, has two major rivers flowing through it, and has a huge catchment area, water has been a perennial problem in the region because of neglect of the previous governments. The elaborate system of tanks that served this region prior to the Indian Independence was completely neglected because of heavy emphasis on dam/canal system practiced in post-Independent India. The discriminatory policies of erstwhile state governments further exacerbated the problem wherein dam/canal systems was also neglected in the region. Right now, the farmers in Telangana heavily depend on irrigation using pumps drawing water from the fast eroding water table. And because of this over dependence, the water level has fallen below dangerous level and in most parts, it has gone complete dry.
Telangana should follow two-fold strategy to overcome this problem immediately. It has to build an efficient dam/canal system crisscrossing the region, and has to restore the old tank system to create a sustainable and efficient irrigation system so that every farm land in Telangana is served with water. In addition to this, Telangana has to keep feeding its growing cities and towns with adequate water supply to take care of residential and industrial needs.