The Politics of Power: Electricity Reform in India

Political scientists have incorrectly identified the role that partial reforms play in shaping outcomes. Partial reforms do not always hinder the adoption of further reform. This is especially true in sectors where some groups have an exit option. In the Indian electricity sector, rather than inhibit further reforms, the adoption of only partial reforms instead sets in motion a new reform trajectory. Without complete reforms, the electricity supply in India continues to be of poor quality. In response, private sector actors exit the state-run system to set up their own generating facilities. Their decision to exit shapes the reform strategies of politicians, because it creates new reform options. Drawing on both quantitative and qualitative analysis, this study demonstrates that politicians encourage market-based electricity production in the new system created by private actors, while maintaining the status-quo in the state-run system. With this dual-track strategy, politicians encourage the move toward open and competitive electricity production in India, but without jeopardizing the support of a key electoral constituency.

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