ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Rescue Package for Power Discoms

A mismanaged energy sector is at the heart of India’s fi scal woes. The 2012 package for financial restructuring of power sector losses exemplifi es such mismanagement and merely recycles a 2002 package that did not solve any problem.

About 75% of Indians either lack access to any form of commercial energy for household use or have limited access to the same, well below levels in several low-income comparators. We continue to subsidise food, health, education, and shelter and fund programmes aimed at empowering the deprived, especially women and the girl child. The need for these subsidies and empowerment schemes would have greatly reduced if we had succeeded in providing modern commercial energy to all Indian households. Adequate access to affordable modern cooking energy and electricity would have improved health and education, especially among women and girls (by relieving them from the daily drudgery of collecting biomass and exposure to unhealthy chullahs); improved and developed skills; raised productivity; and provided alternate livelihoods. Most importantly it would have improved the efficacy of some of the subsidy programmes, thereby empowering the deprived and reducing their dependence on subsidies. One does not have to be a high-flying economist to comprehend the positive impact on human development and consequent fiscal stability both at the state and central levels through a lowering of multiple subsidy burdens.

The complete bankruptcy of our energy sector’s brain trust is evident from the fact that the same bunch of “experts” who had designed the failed 2002 one-time settlement of state electricity board dues amounting to some Rs 40,000 crore are behind the 2012 Financial Restructuring of State Distribution Company Dues totalling roughly Rs 2 lakh crore! I hope that these much acclaimed economists will at least now realise that merely naming a loss restructuring scheme “one-time settlement” does not stop the losses from recurring.

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