Ten states get additional Rs 28,204 crore for power sector reforms
Apr 07, 2022
New Delhi [India], April 7 : The central government granted additional borrowing permission of Rs 28,204 crore to 10 states for undertaking the stipulated reforms in the power sector during the financial year ended March 31, Union Finance Ministry said on Thursday.
The Ministry of Finance, based on the recommendations of the Fifteenth Finance Commission, had decided to grant additional borrowing space of upto 0.5 per cent of the Gross State Domestic Product (GSDP) to the states every year for a four year period from 2021-22 to 2024-25 based on reforms undertaken by the states in the power sector.
This was announced by the Finance Minister in the Budget speech of 2021-22.
"The objectives of granting financial incentives as additional borrowing permissions for taking up reforms in the power sector are to improve the operational and economic efficiency of the sector, and promote a sustained increase in paid electricity consumption," the ministry said.
In order to avail additional borrowing space linked to Power sector reforms, the State governments had to undertake a set of mandatory reforms and also meet stipulated performance benchmarks.
The reforms to be carried out by the states include the progressive assumption of responsibility for losses of public sector power distribution companies (DISCOMs) by the State Government, transparency in the reporting of financial affairs of power sector including payment of subsidies and recording of liabilities of Governments to DISCOMs and of DISCOMs to others; timely rendition of financial and energy accounts and timely audit; and compliance with legal and regulatory requirements.
The Ministry of Power is the nodal ministry for the assessment of the performance of states and determining their eligibility for granting additional borrowing permission.
In the financial year 2022-23 too, the states can avail the facility of additional borrowing linked to reforms in the power sector. An amount of Rs 1,22,551 crore will be available as an incentive to states for undertaking these reforms in 2022-23. States who could not complete the reform process in 2021-22 may also avail the benefit of additional borrowing earmarked for 2022-23, if they carry out the reforms in the current financial year, the Finance Ministry said.
