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Why Kerala Has Struggled to Replicate Perinjanam’s Solar Success

In Perinjanam, a small coastal village in Kerala, rooftop solar panels have transformed hundreds of households—slashing electricity bills and proving the potential of community-driven energy. Yet across Kerala, India’s most literate state, similar projects remain rare, revealing the gap between local innovation and statewide adoption. Here is how it can happen.

Dipin Damodharan

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80 Savings on a Household Electricity Bill jpeg
Office of the Perinjanam Gram Panchayat, the elected local self-government body, which acts as a facilitator for renewable energy programs and other community initiatives. Image by Lakshmi Narayanan/EdPublica

On a humid afternoon in Perinjanam, a coastal panchayat in Thrissur district of the South Indian state Kerala, Susheela leads me into her kitchen and points upstairs to the metal roof. The small array of solar panels there has changed the family’s daily expenses. “Before 2016, our electricity bill was over Rs 1,000 every month. After that, it rarely crosses Rs 200,” she says, folding her hands as if to show how the burden has lifted. “Installing solar panels on the roof has been undoubtedly beneficial. We’ve seen clear savings on our bills,” Susheela says.

Perinjanorjam (Perinjanam Energy), the village’s community-driven rooftop solar initiative, now powers more than a thousand households like Susheela’s and has drawn attention across India. In 2016, the panchayat embarked on what was then an audacious experiment—combining government subsidies, cooperative-bank lending, and local mobilization to make an energy self-reliant village. The results were undeniable on the ground. But the very success that made Perinjanam a poster child has not translated into a replicable model across Kerala. Nine years since its launch, and three years after high-profile endorsements and study visits, other panchayats still hesitate. Why?

The Perinjanam solar project, driven by the collective efforts of local institutions and residents, is celebrated as a model for other panchayats. For a state like Kerala, which relies heavily on electricity from outside, rooftop solar projects are crucial. By involving ordinary families, they demonstrate the strength of a decentralized approach—while also advancing India’s clean energy transition.

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A wide view of Perinjanam village in Kerala where renewable energy ambitions meet everyday realities.Image by Lakshmi Narayanan/EdPublica

At COP26, India pledged 500 GW of renewable capacity by 2030. Progress has been steady, with 235.7 GW already in place, but the pace must increase. Decentralized, community-driven initiatives like Perinjanam could help bridge the gap.

What is the Perinjanam Project?

It’s an alternative electricity generation and distribution model, with participation from the public, panchayat, cooperative bank, Kerala State Electricity Board (KSEB), and Solar Energy Corporation of India (SECI), carried out in Perinjanam gram panchayat, Thrissur. Perinjanam, the first panchayat in India to generate 700 kW of rural solar power for itself, is a model for local energy self-sufficiency. Daytime electricity from the solar panels is used for household needs; the surplus is supplied to KSEB’s common pool grid. At night, homes rely on KSEB power. Electricity bills reflect the difference between what is exported and what is imported. If the exported and imported electricity quantities are equal, the only charge is meter rent. The heart of Perinjanam project is a consumer committee set up for project implementation.

Launched in 2016 by then-panchayat president Sachith KK with the support of then Kerala State Electricity Regulatory Commission (KSERC) chairman TM Manoharan, Perinjanam’s solar initiative was born out of their vision, as said by then consumer committee head Noorrudheen to EdPublica. “Sachith learned about SECI’s 500 kW subsidized scheme for solar in Kerala through Manoharan. The idea to use this for local benefit was decisive,” Noorrudheen says.

Through numerous meetings and awareness campaigns, ward members reached out house-to-house to educate people about solar. Since the project started soon after a major solar scam in Kerala, skepticism lingered. The initial plan was for a 500 kW project covering 250 homes, with rooftop units typically ranging from 1 to 5 kW. For Perinjanam residents, many of whom faced financial hardships, participation in the novel project required financial support. Both the panchayat and the cooperative bank (then under CPI(M) leadership) decided after much discussion to give low-interest, collateral-free loans to participants. Noorrudheen credits this bank loan as the key factor that made the Perinjanam project a success. With Manoharan as an advisor, KSEB offered full support. Households with bills above Rs 500 were targeted first. An active, proactive panchayat president engaged the cooperative bank, registered a consumer committee as a one-stop solution for project management, and worked with SECI for subsidies. Thus, Perinjanam stands out as a unique community-driven project involving multiple stakeholders—a model found nowhere else.

According to latest estimates, Perinjanam section’s monthly generation stood at 3.16 MW, now including Kaypamangalam and Mathilakam panchayats. “There are 1008 connections under the Perinjanam section. The project covers 956 houses. The remaining are shops and other institutions. Today the project reached a capacity of 4,305 kW. The total generation is 316,823 units,” says KSEB Assistant Engineer Thara.

The project can produce enough electricity in a year to meet the needs of roughly 4,000–6,000 rural households. Perinjanam has around 5,342 households, according to the last Census report, and a typical rural home in Kerala uses about 97 units per month. That means the plant’s full annual potential—roughly 5.17–6.89 million units—could supply most, if not all, of the panchayat’s households. So far, it has generated 316,823 units, already enough for about a year’s supply to 270 homes, a figure expected to grow as the system completes more annual cycles—enough to power nearly all homes in one or two wards of Perinjanam.

Why Hasn’t Perinjanam Been Replicated?

Apart from achieving energy self-sufficiency through solar power, a 2022 report revealed that the Perinjanam Solar Initiative reduced carbon emissions by 192,000 kilograms. Inspired by Perinjanam’s outcomes, 37 panchayats in Tamil Nadu decided to implement similar projects, and in 2022, a 45-member delegation from Tamil Nadu visited Perinjanam to study the model.

Kerala Chief Minister Pinarayi Vijayan and Finance Minister K N Balagopal had publicly urged other panchayats to adopt the Perinjanam model. However, no other panchayat has followed suit so far. Let us look at the reasons behind this.

One major reason, as often pointed out, is that the Perinjanam Solar Project was not a flagship initiative of the panchayat itself. The panchayat acted only as a facilitator, while it was the consumer committee that took the lead in implementation. The project originated from the idea of the then panchayat president, who pushed it forward, but what truly set it apart was the proactive role of the consumer committee.

The Perinjanam model is in fact the most practical and replicable model for other panchayats. What makes it unique is the structure of its consumer committee, a 14-member registered body that oversees everything—including the maintenance of solar units and overall project management. Earlier, the panchayat president himself was part of the committee. However, with a change in the elected local body, the current panchayat committee appears less interested in the project. The consumer committee members are elected annually by the beneficiaries themselves. “It is this committee system that keeps the initiative alive,” explains Noorrudheen.

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Office of the Perinjanam Gram Panchayat, the elected local self-government body.Image by Lakshmi Narayanan/EdPublica

Our visit to the panchayat office confirmed this impression: informally, top officials acknowledged that the panchayat functions only as a facilitator. And the response reflects their lack of interest. “For Perinjanam’s success to spread elsewhere, what is needed most is government-level intervention,” says Sachith. He recalls that Finance Minister Balagopal even mentioned Perinjanam in his budget speech, urging local bodies to adopt such initiatives. “But that is not enough,” he argues. Each year, the government issues guidelines listing ten mandatory activities/action plans for local bodies. Unless rooftop solar—implemented with people’s investment, cooperative bank support, and government subsidies—is included in that framework, and unless it becomes part of the annual project plan, real expansion will not happen. “So far, no such directive has come. That is a big reason for the failure,” Sachith adds. “If each of Kerala’s 956 panchayats installed even one megawatt, which alone would add up to 956 MW. People are willing to invest their money; cooperative banks only need to support those who cannot afford the upfront cost. It requires far less effort and expense than building new power projects. But it must be made mandatory to install 1 MW of solar energy in every Panchayat,” he insists.

Another barrier is the lack of awareness. “People do not fully understand what green energy is, nor why shifting to it is important,” says the former panchayat president. “I installed a 4 kW rooftop solar unit at my house. I own an electric scooter and even an electric car. But very few people think about how far we can run an entire household on green energy.”

There is also the issue of local body leadership. Panchayat leaders often fail to think innovatively about the possibilities before them. “We once used CSR funds to power streetlights with rooftop solar. The panchayat, which had an electricity bill of Rs 90,000(approximately $1,015.50) , reduced it by nearly Rs 30,000 ($338.50),” recalls Sachith.

For N K Sathyanathan, who was the president of the local cooperative bank during the project’s rollout, the main barrier to replication elsewhere is lack of financial support mechanisms. “When we began Perinjanam Solar, cooperative banks technically had no provision to offer loans for rooftop solar. But with the support of the then panchayat president and Manoharan from KSEB, we devised a sub-rule to make it possible,” he explains. The bank allocated Rs 1 crore for loans, offering up to Rs 50,000 per individual with minimal collateral—family members could stand as mutual guarantors, without the need for extra security. The loans were offered at low interest and had a 36-month repayment period. Over 300 households received loans in the first phase, and almost all repaid ahead of schedule, without a single default.

Sathyanathan argues that if Kerala’s many cooperative banks adopt a similar loan framework, it could unleash a revolution in rooftop solar. He recalls even Tamil Nadu officials asking him how they managed it, and he shared their model of innovative lending. “When electricity demand rises, states often turn to nuclear or hydro projects. But rooftop solar is a viable alternative. If encouraged, Kerala would never need to depend on buying electricity from other states,” he says. “The government doesn’t lose a single rupee on this model.”

Noorrudheen adds that affordable financing is crucial to expand rooftop solar to low-income households. He also stresses that consumer committees are vital: since these are long-term projects, relying on elected panchayat bodies alone is risky, because changes in leadership after elections can disrupt continuity. Instead, projects should be run by independent consumer committees, supported by the panchayat. Ensuring the availability of technical experts even after the warranty period is another key requirement.

Premlal, convener, consumer committee, thinks that the lack of interest from agencies like KSEB is also a factor. “The Perinjanam project happened due to a confluence of many factors—the vision of the then panchayat leadership, intervention by the KSEB regulatory commission chairman, Manoharan’s initiative, and crucially, cooperative bank financing. Many residents also invested from their own pockets. Unless such elements come together, replication elsewhere will remain difficult.”

“At that time, about 500 people in Perinjanam were aware of solar. It was significant that a 1 kW system could be installed for Rs 45,500 (approximately $664–$684 USD at 2016 exchange rates),” says Sachith. The project was implemented by a 14-member solar consumer committee chaired by the panchayat president, with the panchayat serving as facilitator and eligible houses enrolled. SECI sanctioned a Rs 19,500 subsidy per kW, bringing the actual cost per kW to Rs 65,000; consumers paid only Rs 45,500. The committee handled documentation, SECI coordination, and contracting, freeing consumers from hassles. Contractors were selected through competitive quotations. GPR Power Solutions (Chennai) was contracted for implementation, and the consumer committee continues to manage maintenance. Loans to the tune of Rs 1.3 crore were taken from the cooperative bank for the project.

Lives Transformed

“Rooftop units range from 1 to 5 kW, with the initial target being 500 kW; it’s presumed now to exceed 4,000 kW. Perinjanam’s success inspired others, and the project is a global model—environmentally, too, its benefits are clear. People are very satisfied,” says consumer committee convener Premlal, a fact confirmed by the EdPublica team’s field visit.

Still, people have some anxieties about new regulations. “We installed our solar unit at launch, with Manoharan’s advice. Our bills now are just Rs 130–200. But there are rumors of rule changes, and that worries us,” says Susheela, a Perinjanam homemaker. Recently, bill amounts have increased, which she and others have brought up with the committee. She adds: “We’ve never had any problem with the solar unit. When the panel broke, it was replaced free.” Susheela’s family installed a 2 kW unit via loan; the process was smooth and the amount repaid in two years.

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Susheela, a resident of Perinjanam, outside her home powered by a 2-kilowatt rooftop solar system. Another resident, Bharathan (left), stopped by for a conversation.
Image by Lakshmi Narayanan/EdPublica

Rahimabi, another resident, notes that bills initially came down to Rs 250 but are now as high as Rs 1,000 again, which concerns her. Bharathan, a Gulf returnee, has a 2 kW unit and says he’s never had a maintenance issue. He worries about a possible rule requiring battery storage for units above 3 kW and says his panel may soon need replacing. His monthly bill, once Rs 900–Rs 1,000, is now just Rs 300, but he laments the low compensation from KSEB and the risk of full supply loss in a power cut.

Prajitha and Sreekanth’s family, among the first solar homes in the panchayat, added battery storage alongside their unit because of concerns about rising bills. “Earlier, my bill was Rs 900. Now, we pay only the meter rent—Rs 140. There have been no maintenance issues so far.”

Premlal also reports quick payback and additional income for higher producers, and Sathyan master, another resident, claims he got back as much as Rs 2,000 after use. One house, for instance, produces 17 units per day, and some households that both produce and consume solar energy (prosumers) have earned up to Rs 9,000 by selling power back to KSEB. At the same time, the reality is that the project has not yet reached everyone in the panchayat. “I have never heard about such a solar initiative,” says Raphael, a mason and resident of Perinjanam. Sukanya, a homemaker from Perinjanam, adds, “I had no awareness of such a project, and when I first heard about it, it seemed like something that would cost a lot of money.”

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Rooftop solar–powered homes in Perinjanam village, Thrissur district. Though Kerala trails behind national rooftop solar targets, local households are beginning to adopt the shift.
Image by Lakshmi Narayanan/EdPublica

Why Kerala Needs Rooftop Solar

According to the Ministry of New and Renewable Energy, Kerala currently ranks 13th in the country in terms of installed renewable energy capacity. Across India, nearly 80% of newly added renewable units are solar-based. Government figures show that India has overtaken Japan to become the world’s third-largest solar producer. As of July 2025, the country’s cumulative solar capacity stands at 119.92 GW—of which 19.88 GW comes from grid-connected rooftop systems and 5.09 GW from off-grid installations. Notably, Kerala does not figure among the regions identified by the Centre as high-potential zones for renewable energy.

States like Rajasthan, Gujarat, and Madhya Pradesh have tackled the solar energy challenge by setting up vast solar farms spread across thousands of hectares. Kerala, however, does not have such an option due to its limited land availability. “But there is immense potential for rooftop solar here,” says Sreekanth, an independent researcher in the field.

Data visualization by EdPublica, created with Flourish

According to official government reports, Kerala’s installed solar capacity stands at 1,792.34 MW. Of this, the installed rooftop solar capacity is just 24.93 MW. Data released by the Ministry of New and Renewable Energy (MNRE) shows that the state’s total renewable energy capacity is 4,106.78 MW. This means rooftop solar contributes only 1.39% of Kerala’s total solar capacity, and just 0.61% of the overall renewable energy capacity.

Kerala has set ambitious targets: to achieve 100% renewable energy by 2040 and to become a net carbon-neutral state by 2050. The Kerala State Action Plan on Climate Change 2023–2030 (Kerala SAPCC 2.0), released by the Chief Minister, outlines several programmes and strategies designed to help the state reach these goals.

Data visualization by EdPublica, created with Flourish

In this journey, rooftop solar projects will have a decisive role to play. Kerala now has 152,000 rooftop units (946.9 MW), a top growth record under the PM Surya Ghar programme—yet only 2 percent of its 13 million energy consumers use rooftop solar. Critics say new policies have raised fresh challenges, even as KSEB imports about 70% of its electricity from outside. Solar remains the best alternative.

Rising Challenges

Noorrudheen points out a growing concern: because of the current approach of the government and KSEB, solar power is becoming a less attractive option for ordinary people.

KSEB, however, argues that there is another side to the issue raised earlier by Bharathan. According to the utility, grid-connected solar units can impose additional costs on consumers. In Kerala, peak electricity demand occurs between 6 p.m. and 11 p.m., whereas households that both produce and consume solar energy (prosumers) use only about 36% of the power they generate. The rest is exported to the grid. But at night, they draw back about 45% of their supplied energy. On average, KSEB purchases only 19% of the solar power generated daily.

This mismatch adds financial pressure: because electricity costs rise during peak hours, KSEB estimates that the power banking arrangement could result in losses of nearly Rs 500 crore in FY 2024–25. This translates into a 19-paise increase per unit of electricity for Kerala’s 13 million consumers.

If rooftop solar systems above 3 kW are installed without battery storage, this burden is expected to rise further in coming years. KSEB projects that by 2034–35, consumers may face an additional 39 paise per unit due to this imbalance. These figures form the basis of the argument for making battery storage mandatory, though such a move poses another serious challenge for scaling up rooftop solar projects. At present, Kerala ranks fourth in India in terms of installed rooftop solar capacity, behind Gujarat, Maharashtra, and Rajasthan.

Regulatory Impacts on Rooftop Solar Adoption

The regulatory framework may further affect adoption. The Kerala State Electricity Regulatory Commission (KSERC) has proposed restricting net metering to systems under 3 kW, down sharply from the earlier 1 MW limit. Larger consumers would instead fall under net billing or gross metering, which are far less favourable.

Financial implications are significant. Under net billing, exported solar power is priced at the Solar Energy Corporation of India (SECI) discovered tariff, often as low as Rs 2–2.5 per kWh, compared to the Rs 3.59 per kWh retail tariff that consumers pay when buying from the grid. This pricing difference reduces savings and extends the payback period of rooftop solar investments. Moreover, households may need to install costly battery storage systems, which are not subsidized and can cost Rs 16,000–18,000 per kWh of capacity.

Market Consequences

Impact on adoption has already become visible. Reports suggest that Kerala’s monthly rooftop solar installation rate has dropped from 15 MW to just 5–6 MW since the draft regulations were introduced. While regulators argue the changes are necessary to ensure grid stability and minimize utility losses, the burden of balancing the grid has effectively been shifted to individual consumers. This risks discouraging both new and existing users from investing in rooftop solar, potentially slowing down Kerala’s progress toward its 2040 renewable energy and 2050 carbon-neutrality goals.

Perinjanam’s New Phase

“As part of the next stage of growth, Perinjanam is set to introduce battery storage as a new model,” says Sachith. A Battery Energy Storage System (BESS) in solar refers to a sophisticated system that stores electrical energy generated from solar panels in advanced rechargeable batteries for later use. This allows energy to be captured during peak solar production, stored when the sun isn’t shining, and then discharged during times of high demand or low solar output. BESS systems improve grid stability by balancing supply and demand, provide backup power during outages, and enhance the integration of intermittent renewable energy sources like solar.

“In our model, the electricity we generate will be stored and then supplied to KSEB during peak hours. At present, we receive just Rs 2.83 per unit, but with this system it could increase to as much as seven rupees,” Sachith explains. He stresses that such storage models must be widely implemented across Kerala. The Perinjanam project is already moving forward with this plan. The first unit will have a 500-kilowatt capacity, with an investment of around Rs 1.5 crore for battery storage. Of this, 10% will be contributed by the consumer committee, while the remaining 90% will come from a mix of 50% subsidy and 40% viability gap funding. The committee has also demanded a 20% profit margin.

With the successful implementation of this initiative, Perinjanam Solar is expected to gain greater recognition and be discussed at a much larger scale…

(This story was produced with support from Internews Earth Journalism Network)

Dipin Damodharan is an award-winning journalist, editor and media entrepreneur, and Co-founder and Editor-in-Chief of EdPublica, an independent global media platform covering education, science, research, innovation, climate and public policy. With more than a decade of experience in journalism, he has worked across print, digital and multimedia media. His reporting explores science, climate, sustainability and the social impact of research and innovation. His work has been recognised by the Solutions Journalism Network and other journalism organisations.

Biodiversity

As Indian Cities Change, What Happens to the House Sparrow?

India’s house sparrows are still common in many places, but their urban habitats are changing fast. Here’s what the shift in buildings, greenery and food sources means for a familiar city bird.

Vaishnavi V S

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House sparrow perched on a green conifer branch
A house sparrow perched among dense green foliage. The familiar urban bird is increasingly at the centre of conversations about changing habitats and biodiversity in Indian cities. Image credit: MrsBrown/Pixabay

For generations, the house sparrow has been part of India’s everyday soundscape. Nesting in roof spaces, feeding near homes and markets, and appearing in balconies and courtyards. Today, however, many of the spaces that once accommodated the bird are changing. Older houses are giving way to sealed apartment buildings. Open areas are being paved. Green spaces are becoming fragmented, while traffic and construction are reshaping urban habitats.

Across Indian cities, the spaces house sparrows once used for nesting and feeding are becoming harder to find. This has led to severe decline in the number of sparrows in urban areas.

Why March 20 is World Sparrow Day

World Sparrow Day has been observed every March 20 since 2010. It was initiated by the Nature Forever Society, an India-based conservation organisation, to raise awareness about the house sparrow and declining populations of common birds. The initiative has since become an international observance.

In India, the campaign has also helped bring urban bird conservation into the public conversation. Delhi declared the house sparrow its state bird in 2012.

Are Sparrows Disappearing from India?

The house sparrow remains widespread, and available evidence does not support treating the species as uniformly declining across every part of India. Recent research from Karnataka illustrates the point. A study of 16 small and medium-sized cities recorded 57 bird species, with the house sparrow ranking among the five most abundant species observed. Researchers recorded 118 house sparrows during the survey.

But abundance in one region does not rule out declines elsewhere. Government and conservation reports have pointed to loss of nesting spaces, habitat changes and reduced food availability as potential pressures on urban sparrows. Rather than a nationwide disappearance, India is seeing a more uneven picture, with sparrows persisting in some urban areas and declining in others

The Architecture Problem

For a bird that commonly nests in cavities, buildings are more than structures. Rapid urbanization has destroyed their habitat. Older houses often had gaps beneath roofs, openings in walls and other spaces where sparrows could build nests. Modern construction tends to seal these spaces.

House sparrow drinking water from a shallow surface in an urban setting
A house sparrow drinks water from a shallow surface. Access to clean water, food and suitable nesting spaces can become increasingly important as urbanisation changes the habitats available to sparrows in Indian cities. Image credit: Betexion/Pixabay

The result is an unintended shift in urban ecology: buildings may become more efficient and secure for people while providing fewer nesting opportunities for birds. Government sources have previously identified the replacement of older houses and courtyards by concrete multi-storey construction as one factor affecting sparrow habitat.

Survival in Question?

Food availability is another part of the story. Sparrows can feed on grains and seeds, but insects are important in the diet of growing chicks. Changes in vegetation and pesticide use can therefore affect the food available during the breeding season. This means putting out grain on a balcony may help individual birds, but it cannot replace the wider habitat they require.

A functioning urban habitat needs food, nesting sites, water and vegetation—not just bird feeders. Recent research in Karnataka adds another dimension to the urban bird story. The study found that the number of motor vehicles and the amount of local greenery were among the most important environmental factors associated with bird species richness and diversity across the cities surveyed.

Researchers found that greenery can provide opportunities for feeding and breeding, while traffic can create disturbance. The finding is significant because urban biodiversity is not determined only by large parks. Street trees, gardens, shrubs and smaller patches of vegetation can also shape which birds are able to live in a neighbourhood.

What Cities Can Do?

Sparrow conservation does not necessarily require large-scale wildlife projects. Nest boxes can provide alternative nesting spaces where natural cavities are unavailable. Native plants can support insects and provide food and shelter. Clean water sources can become particularly important during hot weather.

Building renovations can also take wildlife into account by avoiding the unnecessary destruction of active nesting sites. In Chennai, for instance, the Koodugal Trust has involved schoolchildren in building sparrow nest boxes. A PIB report said the organisation had built more than 10,000 nests between 2020 and 2024.

At Delhi’s National Zoological Park, World Sparrow Day activities in 2025 included a sparrow count and the distribution of 100 nest boxes to students and visitors.

Why the Sparrow has Become an Urban Warning Sign

The house sparrow is not India’s most threatened bird, nor does its presence alone measure the health of an ecosystem. Its importance is different. It is a species that has learned to live alongside people. When its habitat changes, the effects can be observed at the level of homes, streets and neighbourhoods.

That makes the sparrow an accessible entry point into a much larger issue of how India’s rapidly expanding cities can accommodate its biodiversity as well as people.

India’s urban population and built environment will continue to grow. Development will bring new roads, buildings and infrastructure. The conservation challenge is not to stop that growth, but to understand what ecological space is being lost in the process. For the house sparrow, that could be something as small as a cavity in a wall, a patch of vegetation, a supply of insects or a quiet corner in which to raise its young.

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Interviews

From Scams to Screens: How the National Stock Exchange Rewrote India’s Equity Story

As the NSE gets listed, veteran capital markets expert Uday Tardalkar reflects on the exchange’s transformation of India’s capital markets, technology, investor participation and financial inclusion.

Dipin Damodharan

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NSE Listing: Uday Tardalkar on the Exchange’s Journey
Uday Tardalkar

The NSE listing marks a new chapter for India’s capital markets. Uday Tardalkar reflects on the exchange’s journey from screen-based trading and dematerialisation to retail participation, derivatives and investor education.

When the National Stock Exchange (NSE) emerged in the mid-1990s from the shadow of the 1992 securities scam, it did not merely introduce another trading venue—it dismantled the insular, paper-choked world of regional trading rings and rebuilt Indian capital markets on a foundation of satellite connectivity, automated limit-order matching, and central counterparty clearing. Over the past three decades, that architectural shift has transformed India from a nation of passive bank savers and physical gold accumulators into one of the world’s most dynamic equity ecosystems.

In this wide-ranging conversation with Dipin Damodharan, Uday Tardalkar—Chairperson and Independent Director at RoseMerc Limited, a member of the NSE’s Mumbai Regulatory and Investor Grievance Redressal Committee, and a veteran of nearly four decades in capital markets, including a stint heading operations at Tata TD Waterhouse Securities—reflects on the structural milestones that defined the NSE’s journey. He discusses the transition from 70-day paper-based IPO cycles to T+3 digital listings, the risks facing retail capital in speculative derivative markets, the vital role of the SME board in nurturing startups, and what it will take to cultivate a disciplined investor class as India marches toward its Viksit Bharat 2047 economic roadmap.

Edited excerpts:

Dipin Damodharan: Could you tell us about the historical relevance of the NSE in India’s capital market journey, specifically its origins and institutional importance?

Uday Tardalkar: As the saying goes, certain major institutions emerge out of adversity, and the NSE is a prime example. Following the 1992 Harshad Mehta securities scam, there was an urgent need for screen-based trading and structural transparency to safeguard investor interests.

A core group from IDBI led the initiative under Dr. R. H. Patil, who became the founding Managing Director and established the institution. The exchange commenced operations with the Wholesale Debt Market, followed shortly by the equity segment in late 1994. By expanding its reach to every nook and corner of the country, the NSE empowered retail investors to participate in the markets.

It was a watershed achievement in the history of Indian capital markets: ordinary citizens gained direct access, eliminating the geographic limitations and inefficiencies of regional stock exchanges. The NSE’s aggressive thrust on technology democratized market participation.

Dipin Damodharan: How did the broader financial ecosystem evolve alongside the exchange?

Uday Tardalkar: Portfolio diversification across asset classes has always been essential, and the NSE pioneered this multi-asset framework. It began with debt and equities, introduced derivatives trading in 2000 as India’s first exchange to do so, and went on to launch mutual fund order routing platforms, the Social Stock Exchange, and Electronic Gold Receipts (EGRs), alongside international trading infrastructure at GIFT City.

Because of this breadth, the NSE dominates both the cash and derivatives segments. For any exchange, liquidity is the ultimate benchmark, particularly for Foreign Portfolio Investors (FPIs). The NSE remains the clear leader on this front.

Dipin Damodharan: How did the post-1991 economic liberalization feed into the formation and operational structure of the NSE?

Uday Tardalkar: Economic liberalization gathered momentum from 1993 onward, reshaping how markets operated. In the pre-reform, paper-based era, public issues (IPOs) took upwards of 70 days to close and finalize, and physical share certificates were prone to bad deliveries and theft.

The NSE transformed this framework in partnership with the banking sector. Today, through UPI and the ASBA (Application Supported by Blocked Amount) mechanism, an IPO opens, closes, and lists within three working days (T+3). Capital never leaves an investor’s bank account until actual allotment; funds are simply blocked.

Equally vital was counterparty risk mitigation. Investors need the certainty that buying shares guarantees receipt of securities, and selling guarantees payment. To solve this, the NSE established the National Securities Clearing Corporation (now NSE Clearing), a dedicated clearing corporation that recently completed 30 years of operation. That infrastructure gave investors complete peace of mind.

Dipin Damodharan: Historically, retail participants were skeptical of equities. What role did the NSE play in reframing the stock market as a viable long-term investment channel?

Uday Tardalkar: In the open-outcry era, without electronic matching engines, retail clients relied entirely on physical contract notes mailed by brokers.

When the NSE launched computerized trading, order confirmation became transparent. By 2003, it rolled out nationwide internet trading. For younger generations who expect immediacy, the exchange provided an interface where buy and sell executions, along with price discoveries, were communicated in real time. That operational transparency replaced suspicion with confidence.

Dipin Damodharan: Stock market penetration in India still hovers under 10%. How can the exchange push further to democratize participation?

Uday Tardalkar: Opening a demat account is the first step toward market entry. India currently has over 20 crore demat accounts. While growth was gradual initially, the post-COVID period saw a significant inflection point, adding 2.5 to 3.5 million new accounts almost every month.

Beyond direct equity, mutual funds play an indispensable role. Today, retail engagement is no longer confined to Mumbai, Delhi, or Bengaluru. Tier-2 and Tier-3 centers—spanning from Kochi to Jammu, and Gandhinagar to Guwahati—are driving growth. The mutual fund industry’s emphasis on “Beyond-30” (B30) cities has broadened the investor base substantially.

Historically, Indian households favored physical assets: gold and real estate. That mindset is shifting toward financialization. Government vehicles like the National Pension System (NPS), which allocates systematically to equities, demonstrate how patient capital yields double-digit compounding over the long run. Supported by campaigns like “Mutual Funds Sahi Hai,” individuals are aligning investments with their financial goals and risk appetite.

Dipin Damodharan: Young investors often confuse long-term investing with short-term trading. How should they navigate this distinction?

Uday Tardalkar: The habit of checking smartphones constantly—much like scrolling through messaging apps—has conditioned retail traders to treat portfolio balances as intraday scorecards.

Equities are inherently long-term compounding instruments. For disciplined wealth creation, systematic investment plans (SIPs) in mutual funds provide the optimal route. If an individual has the analytical rigor to evaluate balance sheets, direct equity investing is viable, but it must be approached with a multi-year horizon.

Historically, conservative domestic investors leaned on the Public Provident Fund (PPF), which offers around 7.1% tax-free—roughly equivalent to a 10% pre-tax return. Yet over 15-year rolling horizons, equity indices have historically beaten fixed-income vehicles by generating 12% to 14% annualized returns.

Trying to time market peaks and troughs is futile; no one can accurately forecast turning points. Sectors rotate in cycles—we have moved from FMCG and IT dominance to infrastructure, defense, and emerging service economies. Directing capital into high-conviction businesses through cycles builds durable net worth; intraday trading does not.

Dipin Damodharan: Is there a gap in financial literacy among new entrants?

Uday Tardalkar: Expanding investor education remains essential. SEBI, alongside the stock exchanges and depositories like NSDL, conducts nationwide literacy programs. Crucially, these workshops are delivered in regional languages, which is non-negotiable for a multilingual country like India.

Financial planning must always follow a disciplined hierarchy:

  • Secure adequate pure-term life insurance for household earners.
  • Establish comprehensive health insurance cover.
  • Build emergency liquidity before deploying surplus capital into risk assets.

Too many young entrants bypass this ladder and jump directly into the futures and options (F&O) segment. SEBI’s analytical studies have revealed that over 90% of individual retail traders lose capital in derivatives. Education must emphasize that wealth is built through compounding over decades, not overnight speculation.

Dipin Damodharan: How does the NSE maintain operational resilience given this massive expansion?

Uday Tardalkar: In its founding years, the NSE deployed VSAT technology to bypass terrestrial telecom limits and link broker terminals across Indian towns.

Operationally, the exchange serves as the nation’s financial barometer. Through major disruptions—including the 2005 Mumbai floods, market crises, and the COVID-19 lockdowns—the core trading engine functioned without interruption.

That resilience has accommodated exponential volume growth. A decade ago, monthly domestic SIP inflows stood at a fraction of what they are today; currently, monthly SIP collections routinely exceed ₹20,000–₹25,000 crore. Maintaining uninterrupted clearing, settlement, and trading continuity is what underpins this retail trust.

Dipin Damodharan: For a complete beginner, what is the ideal entry vehicle: trading or investing?

Uday Tardalkar: Investing—unequivocally.

While intraday traders supply short-term market liquidity, wealth creation requires ownership of productive businesses over time. A professional starting their career in their early twenties who commits capital to equity mutual funds or the NPS until age 60 can achieve life-changing compounding even at a 12% to 13% CAGR.

For retail participants:

  • Avoid speculative trading: Derivatives should not be treated as a shortcut to profits.
  • Leverage institutional research: Utilize free, verified corporate disclosures and equity research available on exchange portals.
  • Work with qualified advisors: Match assets to timelines. For low risk, use debt instruments; for balanced growth, adopt dynamic hybrid funds (such as 65:35 equity-to-debt allocations).

Dipin Damodharan: How can India’s startup ecosystem utilize the exchange infrastructure effectively?

Uday Tardalkar: Listing directly on the main board requires stringent capital and track-record thresholds that most early-stage companies cannot meet. To bridge this, the NSE established the SME platform (NSE Emerge).

This board allows small and medium enterprises and growing startups to raise public growth capital with proportionate compliance requirements. Once an enterprise scales its balance sheet and revenue, it can migrate seamlessly to the main board. For the millions of micro and small enterprises across India, the SME board provides an institutional roadmap to scale into publicly held corporations.

Never commit capital out of haste or social media trends

Dipin Damodharan: Looking ahead toward the Viksit Bharat 2047 vision, how do you see the capital markets supporting this transformation?

Uday Tardalkar: The national objective for 2047 is to transition India from a nation of passive savers into a nation of informed investors.

Financial inclusion laid the foundation: over 50 crore Jan Dhan bank accounts integrated millions into the formal banking system, while UPI streamlined capital mobilization. The next phase involves shifting surplus savings out of idle physical assets and unhedged liabilities into productive economic avenues: mutual funds, equities, and sovereign gold instruments.

A resilient economy requires diversified asset allocation. By distributing capital across equities, fixed income, and commodities rather than concentrating it in a single basket, households build enduring resilience.

Dipin Damodharan: If you had to identify the major milestones in the NSE’s history, what would they be?

Uday Tardalkar: Five key developments define its journey:

  1. Screen-Based Trading: Transitioning from the physical open-outcry ring to transparent, electronic limit-order books via satellite terminals nationwide.
  2. Novation and Central Counterparty Clearing: The establishment of the Clearing Corporation, which eliminated counterparty default risk.
  3. Dematerialization via NSDL: Transitioning the market from physical paper certificates to electronic book-entry settlement in 1996, eliminating bad deliveries and counterfeit risks.
  4. Product Diversification: Expanding beyond cash equities into index and stock derivatives, internet trading, mutual fund platforms, and Electronic Gold Receipts.
  5. Global Benchmark Exchange Listing: As the NSE prepares for its domestic public listing on the BSE, its scale and profitability position it among the top market infrastructure institutions globally alongside the CME Group, ICE, and Nasdaq.

Dipin Damodharan: What is your concluding message on responsible investing for young market entrants?

Uday Tardalkar: The NSE’s core advisory sums it up best: “Soch Kar, Samajh Kar, Invest Kar” (Think, understand, and then invest).

Never commit capital out of haste or social media trends. If you lack the time or training to dissect corporate financial statements, route your savings through professional asset managers via mutual funds and systematic pension frameworks. Approach the market calmly, align your portfolio to realistic risk boundaries, and let time and compounding do the heavy lifting.

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Keralam’s Western Ghats ESA debate is now about the land between forests and farms

Kerala’s latest Western Ghats ESA debate is over where conservation should end and farms, homes and settlements begin, as the state seeks changes to the Centre’s 9,993.7-sq-km proposal.

Vaishnavi V S

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Green tea plantations covering the rolling hills of the Western Ghats, with a narrow path winding through the landscape
Tea plantations cover the rolling hills of the Western Ghats, illustrating the region’s mix of cultivated land, forests and human settlements. Representational image. Image credit: Mac Avoy/Pexels

The Western Ghats, with a geological history stretching back hundreds of millions of years, is now a landscape where forests, farms and settlements coexist. Protecting it while accounting for generations of human habitation makes Keralam’s ESA boundary a particularly complex question. While there is broad recognition of the ecological importance of the Western Ghats, the question of which lands should fall within the ESA remains contentious.

Keralam is home to nearly a quarter of India’s plant diversity, with the Western Ghats accounting for much of this richness. The mountain range is also one of the world’s biodiversity hotspots, supporting species found nowhere else.

For the people living across this landscape, however, the ESA debate concerns what happens to their farms, homes and private land if they fall within the proposed boundary?

The ESA: Already Shrunk Considerably

The area proposed for ESA status in Keralam has changed substantially since the Kasturirangan exercise. The High Level Working Group headed by K. Kasturirangan had identified 13,108 sq km across 123 villages in Kerala. Subsequent physical verification by the state resulted in a smaller proposal of 9,993.7 sq km.

The composition of this area is important. About 9,107 sq km is forest, while 886.7 sq km is non-forest land. It is this non-forest portion that has become a source of concern for residents.

Environment Minister of Keralam, Sunny Joseph said people had been requesting that private properties and agricultural land should not be included in this category. He said there was no need for unnecessary anxiety over the ESA proposal and stressed the importance of creating greater public awareness about what the designation actually means.

The concern is not new. Kerala has previously sought the exclusion of populated areas and agricultural land during the process of identifying the ESA.

Aerial view of dense green forest surrounding a winding river in the Western Ghats
Aerial view of the forested Western Ghats, where natural landscapes, rivers and human-used land form a closely connected ecosystem. Representational image. Image credit: urtimud.89/Pexels

Why Keralam’s Landscape Makes the Debate Complicated

Keralam cannot easily separate its Western Ghats into neat blocks of forest and human habitation. Agricultural land, plantations and settlements are scattered through the mountain landscape. In several places, human activity exists close to forests and wildlife habitats, making the question of ecological sensitivity more nuanced than a simple forest-versus-development debate.

Oommen V Oommen, who headed the committee that examined Kerala’s ESA proposal, said the committee had interacted with people living in the Western Ghats region before making its recommendations. He pointed to the distinction made in the Kasturirangan exercise between natural and cultural landscapes.

According to Oommen, about 37% was identified as natural landscape and 63% as cultural landscape. The natural landscape, he said, should be completely protected. Farmland and other private properties were not included in the natural landscape identified for protection.

That distinction is important in Keralam, where people have lived in the Western Ghats for generations. The ESA discussion is therefore not simply about how much land should be protected, but about identifying which landscapes have the ecological characteristics that warrant stronger protection.

Joseph also pointed to Keralam’s densely populated landscape while contrasting it with states such as Tamil Nadu. Conservation boundaries that work in sparsely populated forest landscapes can have very different implications in a state where agriculture, settlements and forests are closely interwoven.

Keralam’s forests themselves cover a substantial part of the state, while the Western Ghats are central to its ecological security. The range feeds most of the state’s major rivers and supports a concentration of endemic species. While on the other hand there are many families depending on agriculture and tourism in these areas.

The Map is Changing

Even the 9,993.7 sq km figure is not necessarily the final boundary. The Keralam government has subsequently sought a further reduction in the proposed ESA and the exclusion of additional villages and populated and agricultural areas.

That makes the present debate less about whether Keralam needs to protect the Western Ghats and more about where protection is most necessary and how accurately those areas can be identified.

For residents, the distinction matters. An ESA notification can bring restrictions on certain categories of development and land use, making clarity over the boundary crucial. For conservationists, meanwhile, leaving ecologically important landscapes outside protection could weaken the purpose of the designation.

The main dilemma faced by Keralam is how they should focus on protecting a globally significant biodiversity landscape without treating every inhabited or cultivated patch of the Western Ghats in the same way.

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