BUSINESSWEEK ONLINE : AUGUST 30, 1999 ISSUE
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INTERNATIONAL -- ASIAN BUSINESS

Dammed If You Do, Dammed If You Don't (int'l edition)
India needs power; activists vow they'll die to stop big dams

In Domkhedi, a village of 500 in western India, residents await floods that will either change their lives--or end them. Any day now, as the annual monsoon raises the waters of the Narmada River, Domkhedi and 50 other villages will be submerged as a result of the massive Sardar Sarovar Dam project. But the Domkhedi villagers, with the support of activists who include award-winning novelist Arundhati Roy, are holding their ground. If New Delhi does not halt work on the nearly completed dam, the locals say they will drown in a forlorn defense of their ancestral lands.

Domkhedi is a tragic chapter in a sadly familiar story. New Delhi has faced opposition almost since it began building giant dams in the 1950s. Villagers and activists have stalled or killed seven large projects over the past 15 years. But faced with huge growth in demand for water and power, New Delhi wants to finish the hundreds of large dams under construction--including the $5 billion Sardar Sarovar. ''We can only feed our millions by having dams,'' says C.K. Koshy, the dam's managing director.

But opponents are just as determined. Dam building has displaced 50 million people, activists assert, and New Delhi's resettlement record is grim. Environmental harm has been excessive, they say--and so has the corruption from these huge projects. ''We are going to stop every project in the country until there are open, accountable, and participatory processes in India,'' says Shripad Dharamadhikary, an engineer and a leading activist in the fight over the Narmada River.

CHEAP AND CLEAN. Nobody can argue India doesn't need more power. Electricity shortages already cost 2 percentage points annually in economic growth, says the Power Ministry. To sustain its economic reform program, New Delhi needs to add 57,000 megawatts of generating capacity by 2002--a 62% hike.

Hydropower is a logical alternative. It's the cheapest, cleanest source of electricity, and New Delhi thinks it could provide 40% of India's needs, compared with 25% now. New Delhi has some showcases, too. Bhakra-Nangal, a 2,500-Mw dam, has helped make Punjab and Haryana India's most prosperous states. Sardar Sarovar is supposed to pump 1,450 Mw of power into three states, including Gujarat, where it is located, while also providing crucial irrigation and drinking water across a vast area. Yet completion has been delayed for four years--which costs New Delhi nearly $2 million a day in interest payments and lost revenue.

The problem isn't hydro, opponents say. It's scale. New Delhi's big projects are too costly and destructive, activists argue. And the government has proven amply that it cannot handle the problems these huge dams create. In some cases, displaced villagers have never been adequately resettled. The answer, activists assert, is a different technology.

PRIVATIZE? Dharamadhikary's group, the Save Narmada Movement, thinks India should build more of the smaller dams it is already constructing by the thousands. The group also advocates better watershed management and rainwater harvesting techniques. While New Delhi argues that this would not be enough, many scientists agree with Dharamadhikary's group. So does the World Bank: It withdrew a $450 million loan for Sardar Sarovar five years ago, when the Gujarat government missed environmental and resettlement targets.

Some observers say New Delhi should simply privatize dam construction. ''It reduces the scope of mismanagement and cuts costs,'' says Arun Bhatia, a former divisional commissioner of Pune in western India. But the hydro issue is now so charged that contractors have lost interest. The one private project under construction, a 400-Mw dam on the Narmada that New Delhi intends to be a showcase, has also suffered delays and losses. Its foreign partner, German utility Bayernwerk, faces pressure at home to withdraw.

New Delhi's foes can draw at least some satisfaction from the government's predicament. Whatever happens to projects now under way, it could be difficult for India to realize the plans it has for more megadams. That means nothing to the villagers in Domkhedi. But until India comes up with an acceptable way to harness hydropower and provide more water, India's reformers--and the rural poor the activists are trying to protect--may pay a price, too.

By Manjeet Kripalani in Indore, Madhya Pradesh

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