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NEW DELHI — Government has given financial incentives to states to accelerate power sector reforms, under which 12 states have received Rs 66,413 crore during the past two fiscals, while for the current fiscal, Rs 1,43,332 crore have been given to them for the purpose.
The finance ministry has been providing financial incentives in the form of additional borrowing permissions.
Government has given financial incentives to states to accelerate power sector reforms, under which 12 states have received Rs 66,413 crore during the past two fiscals, while for the current fiscal, Rs 1,43,332 crore have been given to them for the purpose.
— IANS (@ians_india) June 28, 2023
The finance ministry… pic.twitter.com/trkYi0CPcX
This move aims to encourage and support the states in undertaking reforms to enhance the efficiency and performance of the power sector.
The initiative was announced by finance minister Nirmala Sitharaman in her budget speech for 2021-22.
[bsa_pro_ad_space id=1]Under this, an additional borrowing space of up to 0.5 per cent of the gross state domestic product (GSDP) is available to states annually for a four-year period from 2021-22 to 2024-25.
This additional financial window is dependent on implementation of specific reforms in the power sector by the states.
The initiative has spurred state governments to initiate the reform process, and several states have come forward and submitted details of the reforms undertaken and achievements of various parameters to the power ministry.
Based on the recommendations of the power ministry, the finance ministry granted permission for reforms undertaken in 2021-22 and 2022-23 to 12 state governments.
These are Andhra Pradesh, Assam, Himachal Pradesh, Kerala, Manipur, Meghalaya, Odisha, Rajasthan, Sikkim, Uttar Pradesh and West Bengal.
In 2023-24, states can continue to avail themselves of the facility of additional borrowing linked to power sector reforms.
An amount of Rs 1,43,332 crore will be available as an incentive to states for undertaking these reforms in 2023-24, official sources said.
The primary objectives of granting financial incentives for undertaking power sector reforms are to improve operational and economic efficiency within the sector and promote a sustained increase in paid electricity consumption.