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Home News Power Sector News Chief Economic Adviser bats for a nationwide power market

Chief Economic Adviser bats for a nationwide power market

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Arvind SubramanianIndia should have just one market for electricity, on the lines of the Goods and Service Tax (GST), said Arvind Subramanian, Chief Economic Adviser. “When soft drinks can be sold throughout the country at one price, why can’t we have one tariff for electricity?” he asked.

He was giving a talk on the theme “Co-operative federalism to foster reforms: the case for power sector,” organised by The Hindu Centre for Politics and Public Policy.

 

The CEA said he was surprised to discover that States such as Bihar and Rajasthan had multiple tariff slabs for electricity. “There are slabs for pisiculture, small rabbit farm, panchayat municipalities...How can you run any market system where a commodity has 100, 200 prices depending upon when it is used, how it is used, where it is used... This kind of complexity leads to corruption,” he said. “We have here a system of protectionism... balkanised economic India... in order to sustain what are actually not so good and not so desirable policies at the level of every State... How can we create one market in India for power? The Constitution says, we are one nation. But we are not as far as electricity is concerned,” he said. According to Dr. Subramanian, India had made great strides in the power sector on the physical side. But it needed to catch up on the financial side. The power sector faced challenges on generation side, distribution front and market structure, he said. Since India “is not a one market for power” the choice was restricted to many agencies. The 2000 boom left in its wake a surge in thermal power capacity, he said.

A combination of factors ranging from economic growth slowdown and subsidy-induced surge in renewable energy had affected the financial viability of these thermal plants, triggering a cascading effect across the spectrum. He also pointed to the inability of the political system to charge correct tariff for power. Though power was in the concurrent list, “the Centre has a stake,” he said. “In fact, it is absolutely first order of business for the Centre to make sure we are one India. We cannot be a balkanised India. In power, we cannot allow States to impose and create fragmented markets in India,” he added.

 

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