CRISIS IN POWER EQUIPMENT INDUSTRY 13 Tamil Nadu Minister for Power as chairman) recommended that the electricity boards should earn a gross rate of return of 11 per cent on the capital employed, if not immediately, at least over a period of 10 years. About one and a half decades later the World Bank dictated that the rate of return should be 11 per cent. Even in 1977-78 the average gross rate of return of all boards together was not more than 7.9 per cent, with UP having as low a return as 0.4 per cent, Bihar 3.6 per cent, Orissa 2.9 per cent. Maharashtra and Madhya Pradesh were the only ones earning over 11 per cent, i e, 15.5 per cent and 12.5 per cent respectively. The net loss made by all boards together in 1974-75 was Rs. 144 crores and in 1977-78, Rs. 158 crores, with the UP board's loss growing from Rs. 58 crores to Rs. 96 crores. Where then does the industry gain the confidence to accept the World Bank terms when even after ten years the Venkataraman Committee's recommendations cannot in practice be implemented? The question is answered indirectly by the Rajadhyaksha Committee when it states: "There are today no principles guiding the power tariff structure and decisions are made largely on grounds of political expediency coupled with some uninformed thinking on the correlation between cheap power and economic development of a state." Now, 64 per cent of the power is consumed by the industry and 14 per cent by agriculture. The smaller sector, the domestic and commercial users are subsidising to the tune of crores of rupees the large industrial sector. Paradoxically, the more power intensive the industrial unit, the higher the subsidies. Regarding agriculture, the Rajadhyaksha Committee states: "In particular there is considerable evidence to suggest that in rural areas the beneficiaries of the power subsidies are the larger and more affluent farmers who could well afford to pay the real cost of their power supply." What all this implies is that the government has doled out huge subsidies to the big business and the rich landlords. But it does not follow that if the government raises the power tariff, under the dictates of the World Bank and the IMF, these classes will at all feel the pinch. Since they can "pass on" higher costs to the consumers, charging higher prices, the raising of power tariff will have general inflationary consequences, rather than specifically affecting these particular classes. Moreover, as the Rajadhyaksha Committee itself notes, low tariffs are not the only cause behind the losses made by the state electricity boards. Past policies regarding the import of power equipment have also been a contributory factor to these losses. In the earlier plan periods the accent was on bilaterel aid. In the power sector we received aid from 23 countries and we imported equipment from 18 countries. What were the consequences? The most significant have been a lack of standardisation and a big inventory of spares. On the thermal side alone there are 20 unit sizes between 25 MW and 500 MW. (These are 25 MW, 25.5 MW, 28.5 MW, 30 MW,