Reliable media reports suggest that the upcoming Union Budget: 2021-22 will have a significant emphasis on reviving the power distribution sector.
The budgetary allocation to the power ministry for FY22 is likely to be in the region of Rs.15,000 crore for FY22, as against the estimated spending of Rs.10,000 crore in the ongoing FY21. The budgetary allocation for FY21 was Rs.15,874 crore but not all of it could be spent.
Budgetary allocations to the power ministry are usually directed to Centrally-sponsored schemes like Integrated Power Development Scheme (IPDS), Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY), etc. Capital expenditure incurred by Central PSUs like Power Grid Corporation of India Ltd are generally through their internal and extra-budgeary resources (IEBR).
State government power distribution companies are likely to be focus area in view of their mounting financial losses and their inability to undertake technical upgrade. At least two attempts by the Central government to shore up the commercially efficiency of discoms did no produce results. The UDAY package was the latest attempt that failed to turn around ailing discoms by the stipulated timeframe of March 2019.
Discom dues
According to latest government statistics, Total outstanding by discoms stood at Rs.1,41,573 crore as of end-November 2020, up 35.6 per cent from Rs.1,04,426 crore as of end-November 2019. Of the total outstanding as of end-November 2020, 92 per cent represented overdue amount (outstanding for over six months).
New package
The budget is also likely to announced a Rs.3-trillion package to help state government discoms to reduce their aggregate technical & commercial (AT&C) losses to 12-15 per cent. Currently, such losses are around 21 per cent, which is a matter of serious concern. Among countries with high electricity consumption, this level of losses is amongst the highest for any country in the world. The investment package, it is learnt, will be linked to operational efficiencies that discoms would commit to achieve.
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