Anatomy of Shortages

These days looking at newspapers one cannot but notice a striking anomaly; while the Government and its various ministers insist that there is no shortage of gas, the same newspapers show pictures of long queues at gas shops, and feature stories of migrant labour returning home because domestic gas was not available, or of industrial units shutting down due to gas shortage. It is as if reporters and ministers inhabit different planets. Persons born at the time of Independence, or just thereafter, are inured to shortages, having faced the worst kind of shortages for much of their early lives. Even basic necessities were rationed in the early years of independence; food production could not keep pace with the growing population and so, in addition to consumer goods, essentials like food grains and milk were always in short supply.

MS Swaminathan and Norman Borlaug authored the Green Revolution of 1965, freeing us from dependence on PL 480 wheat. Simultaneously, Verghese Kurien established NDDB, which, in due time, quadrupled milk production ~ thus, ending another vicious shortage. However, other shortages persisted; waiting time for a Premier Padmini car was seven years ~ the same as that for a Bajaj scooter. You had to apply to the Government for even a single bag of cement. Periodically, a shortage of something, or the other, would crop up ~ India had a command economy, with Government, rather than market forces, controlling production, pricing, and distribution, and any miscalculation by the Government, deliberate or otherwise, resulted in a shortage.

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Opening up of the economy in 1991, led to increase in production and easy import of consumer goods, alleviating shortages to a great extent. Still, till recently, shortage of electricity was endemic, with power cuts, scheduled and unscheduled, in most cities, while electric supply to villages and smaller towns was at best occasional. A far worse shortage has cropped up in the last decade; large-scale groundwater depletion, water overuse, land and soil degradation, deforestation, pollution, all compounded by global heating, have led to chronic water shortages in most Indian cities.

According to a NITI Aayog study “Composite Water Management Index (2019),” approximately 600 million Indians face high-to-extreme water stress, with India being ranked at 120 (of 122 countries) in the water quality index. Chennai had a so-called Day Zero in 2019, when its primary reservoirs hit empty, and 21 Indian cities, including Delhi, Bengaluru, Chennai, and Hyderabad, are at risk of running out of groundwater by 2030. India has abundant rainfall, but groundwater has depleted because of poor rainwater harvesting (only eight per cent of rainfall is conserved), and a drying up of water bodies. Additionally, a lot of water is wasted by outdated agricultural practices. Arab countries have massive desalination plants; most countries conserve and recycle water, with Israel recycling nearly 90 per cent of its wastewater, but India has no such successful initiative.

The Jal Jeevan Mission (JJM), launched in 2019, is one of the world’s most ambitious water supply programmes, with a budget allocation of over Rs.3.6 lakh crore (now increased to Rs.8.69 lakh crore), aimed to provide tap water connections to every rural household by 2024. Sadly, JJM is running much behind schedule ~ stalled with allegations of irregularities and inflated costs, and instances of sewage water mixing with drinking water supply. There are some other endemic shortages ~ a shortage of jobs, a shortage of skilled manpower, a shortage of morality ~ about which not much has been done. Another basic shortage is that of manufacturing capacity. The Government aimed to grow the economy quickly, by energising the manufacturing sector with initiatives like Make in India (2014), Production Linked Incentive (PLI) (2020) and Design Linked Incentive (DLI) (December 2021).

Make in India had two major objectives viz. creation of 10 crore new jobs in the manufacturing sector, and enhancing the share of manufacturing in GDP from 15 to 25 per cent in ten years. However, after ten years of Make in India, the share of manufacturing in GDP still hovers between 16 to 17 per cent, and there has been little employment generation in the manufacturing sector. Rather, according to NSSO sample surveys, manufacturing employment has declined from 12.6 per cent of total employment in 2011-12 to 11.4 per cent in 2022-23. Significantly, targets for Make in India have been postponed to 2035. PLI and DLI, have fared little better; even with a budget of Rs.2.96 lakh crore, success has been partial.

As revealed in its fourth review, PLI seems to have degenerated into promoting local ‘assembling’ of smartphones with imported components, resulting in huge export values, but little value addition. The blame for the lack of success of these initiatives does not lie entirely with the Government. The Government liberalised the FDI regime, introduced single-window clearances, reduced compliance burdens, decriminalised a host of offences, drastically cut corporate tax rates, invested huge amounts in infrastructure development, and reduced both the Repo Rate and Cash Reserve Ratio. But, response from industry was sluggish; the Finance Minister loudly wondered why private investment in manufacturing had not gone up, and her Chief Economic Advisor rued the tendency of Indian industrialists to invest abroad and not in India.

Probably, despite all manner of incentives and exhortations, the private sector sees immediate and guaranteed profits in trading, so it keeps away from manufacturing. Our famed start-ups are no better; Commerce Minister, Piyush Goyal, succinctly pointed out at the ‘Startup Mahakumbh’ in April 2025 that Indian start-ups were developing food delivery and online betting apps, while Chinese start-ups were developing machine learning, robotics and next-generation factories. Apart from corporate greed, a significant reason for failure of most Government incentives is the ad hoc manner in which most were announced ~ without a clear blueprint, either for the Government, or for industry.

A current example is the “Manufacturing Mission: Furthering Make in India,” which was announced in Union Budget 2025, but a blueprint for the Manufacturing Mission was announced only after a year. Sadly, after a decade of Make in India, which also focussed on import substitution, reliance on Chinese imports has only increased, the only difference being that dependence on China has shifted from downstream goods to upstream goods. This shift has brought about a change in our industrial policy ~ instead of the earlier policy of restricting Chinese investment, India is now actively courting Chinese biggies – to establish joint ventures, and strategic partnerships. Though we see ourselves as a technically advanced nation, our dependence on other nations is manifest. We depend on China for upstream goods; on the US for advanced technologies, and on Russia for energy and defence equipment.

The obvious reason for these dependencies is lack of innovation and R&D, coupled with a lack of skilled manpower. With the Chinese weaponizing trade by imposing curbs on export of critical rare earth minerals, and by restricting travel of its engineers and technicians to India, a long-term solution has to be thought out. Of immediate concern is the present shortage of oil and gas brought about by the Iran-Israel-America war, which may endure for some time even after the ceasefire. India’s dependence on crude oil import is nearly 90 per cent and LNG and LPG import dependence is around 55-60 per cent, with much of the imports passing through the Strait of Hormuz.

Sadly, as in other sectors, despite the avowed aim to cut import dependence, no long-term steps were taken to develop domestic capacity or to meaningfully, develop external supply sources. For example, crude oil is believed to be present at great depths, below the Deccan Trap (Maharashtra, parts of MP and Gujarat) and the Arabian Sea. Little effort has been made to acquire technology for such deep drilling. The Iran-Pakistan-India gas pipeline, contemplated in the 1990s, has drowned in controversies.

Not much headway has been made in developing Central Asian Republics as steady oil and gas sources ~ the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline is a work in progress, since the 1990s. Surely, we can emulate China, which has a direct pipeline from Russia, a network of pipelines from Central Asia, and also the China-Myanmar pipeline ~ bypassing all choke points. China is also into renewable energy in a big way, and the world leader in EV production. It also deploys technologies like coal gasification. Finally, most shortages are man-made, a result of poor planning. As the Nobel Laureate, Milton Friedman, had said: “If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.

*(The writer is a retired Principal Chief Commissioner of Income-Tax)