Report of Indian Institute of Public Administration ... - Ministry of Power

State Reports (Vol.-III)
Study on `Impact of Restructuring of SEBs’
the Finance portfolio, in his budget speech for the FY 2003-04, which is quoted
below:
“Power sector reform and achieving effectiveness in the power sector will doubtless
be the single important factor that will help achieve or impede fiscal sustainability of
the State finances. The success of the State Medium Term Expenditure Framework
(MTEF) will depend substantially, perhaps almost entirely, on a visible improvement
in the power sector’s performance. Despite the fact that the Government supports the
power sector with a subsidy of Rs 2,340 crore, there is still considerable
dissatisfaction among the consumers with regard to reliability and quality of power.
The power sector deficit now nearly equals the entire revenue deficit of the State. 10 In
other words, unless fiscal discipline is enforced in the power sector, there is little hope
of medium term fiscal stabilisation.”
With an equally heavy subsidy element of Rs 2,373 crore announced in the current
year’s budget for the power sector, one could grasp the truism of the statement in the
quoted budget speech. However, the current budget policy is silent on the reform
process, except for certain provisions made therein to encourage farmers to accept
metering of their pumpsets where it does not exist.
10 This was in 2003-04. As mentioned earlier, the deficit in 2006-07 exceeds the capital budget deficit.
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