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Mr Montek Singh Ahluwalia, Deputy Chairman of Planning Commission, feels that the huge under recoveries of the State Government-controlled power distribution utilities (discoms) may impact the stability of the entire power sector in the country.
Preliminary estimates by the Plan Commission and the last Finance Commission suggest that the discoms are losing anything between Rs 50,000-60,000 crore of revenue annually. “This is a very serious weakness of the Indian power sector which if not addressed may cripple the entire system,” Mr Ahluwalia told newspersons on the sidelines of a conference organised by the Indian Chamber of Commerce here on Friday. “It is simply not possible for the system to bear such losses for a long time,” he said.
The Commission has already appointed a “high-level committee” under the chairmanship of former Union Comptroller and Auditor General (CAG), Mr V.K. Shunglu, for detailed assessment of the scenario and suggest remedial measures. The committee is expected to submit its report in early 2011-12.
The revenue losses occur in an effort on the part of the regulator or the concerned state governments so as to keep the electricity tariff at artificially low levels. While there are discoms not receiving tariff order for years, there are also utilities which did not submit any tariff petition for almost a decade.
Pressure on banking
Mr Pramod Deo, Chairman of Central Electricity Regulatory Commission, recently said that the trend was putting pressure on the banking sector, as the discoms were borrowing money under State guarantee to meet the liquidity crisis.
Mr Ahluwalia, however, remained non-committal on the alleged exposure of the discoms to the banking sector. “I am not apprised about the RBI guidelines on the issues. However, I have doubts if the state governments are offering legal undertakings to for such bank finances,” he added.
Current account deficit
Mr Ahluwalia felt that India may gross 3.5 per cent current account deficit for the fiscal.
According to him, though the deficit appears to be “high”, India could be able to manage it. He felt that lack of preparedness to manage the shortages in the non-foodgrains segment was the prime reason behind the “abnormally high food inflation figures in January.
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