The move is aimed at enforcing fiscal discipline among state governments and discoms but will impact state borrowings
New Delhi: The government is considering holding back release of funds to states to the extent of their unpaid dues to power distribution companies, and treating losses of these utilities as borrowings of states, putting constraints on their finances.
The move is aimed at enforcing fiscal discipline among state governments and discoms but will impact state borrowings. If approved, it will be the strictest measure so far taken to correct the operational and financial position of power distribution companies. Experts foresee huge resistance from state governments.
A government official said the aggregate losses of all distribution companies at the end of last financial year were ₹4,90,000 crore. The average loss of discoms has risen to over 70 paise per unit due to non-reflective tariffs, delayed subsidy payments by state governments and power dues by government departments.
“We are now proposing that the losses of distribution companies be liability of state governments and borrowing limits be restricted by that much. We have proposed to hold back payments to states to the extent they have not released subsidies and government department dues to discoms. This is to enforce discipline among states and discoms. We can’t continue to bail them out every time,” the official said.
Source: energy.economictimes.indiatimes
