Modi, Energy and the Indian Elections

on April 14, 2014 at 2:00 PM


Originally Posted on

On the coast of India’s Gulf of Kutch in Western Gujarat, near a small town called Mundra, an iconic fight against Tata Power’s Mundra coal plant is brewing. This fight has become the epicenter of a ‘rousing struggle’ against coal expansion – and a microcosm of India’s election politics. A small group of local fisherfolk are opposing the plant and leading a campaign that exposes the dark side of unchecked coal development and contradictions in the campaign of leading Prime Ministerial candidate Narendra Modi.

In a country that recently made headlines for the largest power outage in history, Gujarat is an anomaly – it has a power surplus. That, along with industry-friendly policies including a heavy emphasis on special economic zones (SEZs) has helped propel the state’s Chief Minister, Narendra Modi, to become the primary challenger for the position of Prime Minister. Indeed, the idea Modi’s campaign has sold about Gujarat development is something many Indians aspire to.

Even more appealing is that Modi’s power surplus has been supported by a ‘saffron revolution’ thanks to dramatic solar expansion. A true anomaly in coal-dependent India.

But despite Modi’s fervent support for solar energy, Gujarat is also home to some of the biggest coal plants in the country. None more important than Tata Mundra the first, and therefore flagship, in a series of 16 ultra mega coal power plants (UMPPs) being built to stem the power crisis. But far from an examplary showcase of the coal industry’s prowess, it has instead exposed just how poorly the industry is now performing, and just how desperate the need is to diversify India’s energy mix away from this struggling sector.

The truth is Tata Mundra has been an absolute debacle since day one. Despite abundant promises of cheap power, Tata Mundra’s costs have skyrocketed forcing it to raise rates on average citizens. This has broken its social contract – cheap power despite social and environmental harm. Worse, it has set an incredibly harmful precedent in the country – the first project to be let out of a legally binding contract by the Central Electricity Regulatory Commission in order to raise rates and boost profits. Nothing like contract sanctity to boost investor confidence and protect consumers. Which is of course why it will now be held up in courts for years as states and consumers appeal these decisions.

But economic impacts are one thing, local devastation another. Even if Tata Mundra had delivered cut rate power it still can’t paint over what it has done to local fish catch by diverting local waterways and releasing thermal pollution that kills off fish for miles along the coast. That’s why local fisherman havefiled for a full audit of the World Bank Groups financing of the project. An audit whose damning findings were swept under the rug by Dr. Kim and the World Bank but are once again under investigation by another international financier the Asian Development Bank.

It’s these impacts from rampant unchecked industrialization that are ravaging the environment and the social fabric of the state’s coasts and Modi’s political enemies know it. That’s why Arvind Kejriwal traveled to Gujarat to ‘tour’ the development progress of the state. Because while Gujarat has seen large industrial growth, it is also home to some of the lowest social indicators in the country. In fact Gujarat represents one of the lowest per capita per day earning for salaried people in the country. Lower even than the incredibly poor states of Odisha or Madhya Pradesh. Facts that most don’t know thanks to Modi’s impressive marketing campaign.

But it’s not just the AAP who are highlighting the contradictions inherent in Modi’s Gujarat. Already Congress has organized several political rallies up and down Gujarat’s heavily industrialized coastline to appeal to fishing communities impacted by coal development. Tellingly, the rallies bypassed urban centers, instead focusing on the growing unrest building along the Gujarat coastline. The message: end environmental destruction.

With the coal-gate scandal defining the politics of corruption, the fact that Modi’s Chief Ministership has overseen this laundry list of impacts associated with some of the world’s largest coal projects will undoubtedly darken the saffron candidate’s image. It may even put him in the same company as India’s current Environment Minister ‘Oily Moily.’ As Indians head to the polls, what’s happening in Mundra could end up ultimately defining Modi and his plan for the nation.