One Reason Behind India’s Blackout: World Bank Policies and Neoliberalism

This article was originally posted at FireDogLake. View original here.

One-tenth of the planet’s people — one-half of India’s population — lost power completely this week, with a blackout covering most of north India’s highly populated states. What was the reason for the blackout?

Photo by Daphne Wysham

Photo by Daphne Wysham

While pundits and politicians postulate on the reasons for the power failure, one answer is clear: an ideology of neoliberalism foisted on India by the World Bank and IMF was partly to blame for the blackout.

It is not the only cause. Climate change has clearly played a role in India’s blackout: A delayed monsoon season meant lower water reservoirs and higher rates of water siphoning for agricultural purposes rather than power production. This could have been foreseen by the Bank back in the 1990s when climate change was clearly viewed as a problem to be dealt with. Nevertheless, the Bank pushed large hydropower projects in India, ramping up debt, while resettling millions from fertile land near riverbanks.

Meanwhile, India’s biggest and dirtiest source of power, coal, providing over 70% of the country’s power, is increasingly hard to come by. This, too, was something the Bank could have foreseen; yet instead it pushed coal power dependency aggressively in India. There is less and less land available for open-pit mining, deemed more “efficient” than underground mines by the World Bank. The reason for its “efficiency”? Underground miners were once one of India’s most powerful unionized labor forces. While their jobs were dangerous and dirty, they provided a decent living, and their underground mining prevented the widespread environmental and social destruction that open-pit mines ushered in. At World Bank’s behest, however, open-pit mines replaced thousands of underground mines, and miner’s unions were busted and replaced with a handful of workers driving large dump trucks. Efficiency gains may have been achieved, but at what cost?

Open-pit mines are literally hell-holes. They smolder in a constant state of combustion. They ravage the landscape, and cause acid drainage, which destroys the water supply, kills fish, and makes the water unsafe. As with large dams, thousands of India’s poorest tribal people have been uprooted to make way for open-pit mines and placed in resettlement camps where prostitution and alcoholism are endemic. The World Bank once claimed they would provide an acre of land for every acre taken from the most marginalized tribal peoples to make way for mines and dams. But that promise was long ago watered down, then forgotten. Ironically, many of the tribals remain without power to this day. The poorest of the poor the Bank claims to serve got the shortest end of the stick.

Add to that the fact that India’s coal is heavy in ash content, and population pressures on available land means ash disposal is also a problem. So, often, the polluting ash—with heavy metals and radioactive elements—is merely dumped in the already polluted rivers.

As India runs out of space for open-pit mines and ash disposal, it’s increasingly turning to coal from abroad—which comes at a higher price. All of this could have been foreseen by the World Bank and IMF back in the mid-1990s. They were urged by NGOs such as ours to move toward solar, wind and other renewable energies in India — both in the interest of providing power to rural areas more cheaply and averting a climate disaster. And they were even urged by their own hand-picked “eminent person,” Emil Salim, a former board member of one of Indonesia’s largest coal companies, who headed up their three-year Extractive Industries Review, to get out of coal completely by 2008. The reason? The poor were “worse off,” not better off, Salim determined, as a result of the World Bank investments in coal. Nevertheless, the Bank continued to provide billions to one of the most polluting of fossil fuels, while ignoring its climate impact.

Corruption certainly has played a role in India’s power failures for decades. At every step in the supply chain, money is siphoned off, resulting in a shoddy system — from backup systems to warning systems to good cables. Currently, good cables intended for transmission get sold and shoddy materials put in their place.

Electricity theft is also part of the problem, but simply identifying the problem as “theft” — as many do — rather than recognizing that people deserve access to electricity, minimizes the social and economic reasons that drive people to frustration to the point where they feel they have a right to steal power from the grid. Despite massive loans, debt, and the poorest paying for the power with their land or their lives, one-third of India’s households do not have enough electricity to power a light bulb, according to last year’s census. And so they steal it. And in stealing it, they increase energy inefficiency, by often grounding the wire they have hooked up illegally to the grid in the soil, thereby losing more power.

Ironically, one region that did well during the power crisis in India was Jodhpur, where, after a brief interruption, the windmills kept hospitals and households powered up while the rest of the country went black. Were the World Bank to have pushed a model, such as that successfully employed in Germany and other countries, where a “feed-in tariff” — a guaranteed rate of payment for energy fed into the national grid– for renewable energy had been put in place, small farmers and others in rural areas would be able to both provide power to the grid and earn money in doing so. But instead, they foisted on the largest democracy a neoliberal model — where unions were busted, power was privatized, people were treated like pawns on a chess board, while they targeted the affluent and heavy industries first for energy delivery using some of the most environmentally destructive energy resources on the planet. The assumption: energy services would eventually trickle down to the poor. Nearly two decades later, after billions of investment, one-tenth of the world sits in the dark, the planet is rapidly heating up, and the only thing trickling down to the poor is contaminated water or, if they’re lucky, enough water to keep their parched crops alive.