Hydropower Development in India: The Legal-Economic Design to Fuel Growth?

Abstract

Economic liberalization beginning in the early 1990s has represented a paradigm shift in policy discourse in India, from social welfare to economic growth. With its potential benefits of generating power for the growing economy and significant revenue through electricity sales and royalty payments, hydropower development has received center-stage in the hydro-rich but economically weaker Himalayan states of India. Using an institutional approach to examine the evolution of laws and policies on electricity, land, environment, and water, this article seeks to uncover how prevailing legal and economic systems prioritize hydropower generation over other water uses. It argues that federal and state governments have brought about regulatory changes that tip the allocation and distribution of resources and wealth in the favor of increasingly private sector-dominated hydropower development. This resource colonization favors maximizing returns on investment at the expense of minimizing environmental and social costs. The case of the Indian state of Uttarakhand illustrates the structural power of the state government to frame and enforce laws to protect hydropower development while forgoing considerations of environmental flows and the de facto water rights of communities. Changing this status quo will require fundamental alterations to the current institutional structures to ensure a more just and equitable hydropower development regime. These changes-which give greater consideration to socio-environmental sustainability and promote integrated water resources management-should comprise: acknowledging ecosystem and water rights; creating mechanisms where local communities can contest unfair resource allocation; delineating guidelines for states' role as public trustees of water; promoting local participation in monitoring related to hydropower projects; and balancing economic goals with alternative water uses.