Tamil Nadu remains opposed to the payment of subsidy to consumers through direct benefit transfer (DBT) and the privatisation of the power distribution utility.
However, DBT and privatisation form part of the conditions laid down by the Centre as part of its package on power sector reforms. The States carrying out the package will be given an additional borrowing space of up to half a per cent of the Gross State Domestic Product (GSDP) for four years from 2021-22 to 2024-25.
Apprehension
Besides causing apprehension among some sections that DBT will lead to the withdrawal of subsidy, the measure may not benefit the substantial number of deserving consumers, according to sources in the State government. For example, in respect of the domestic category, lakhs of connections are, in practice, being enjoyed by tenants. If DBT is to be carried out, residential property owners will get the benefit disproportionately, leaving out the tenants.
Furthermore, in the performance criteria stipulated in the package, it has been stated that those States that do not provide any subsidy for agricultural connections will be given full marks of 20 under the benchmark of subsidy payment by DBT. The present government, like the previous AIADMK government, is against scrapping the subsidy for farmers. Also, the successive governments have opposed the privatisation of the distribution utility, and there is no change in the position.
Barring these conditions, the State is willing to carry out the other reforms. For the current year, it has expressed its commitment to fulfilling all the entry-level conditions, most of which have already been met, the sources explain. The State’s proposal, for 0.35 percentage point of 0.5% of the GSDP, is awaiting clearance from the Union Finance Ministry. If this fructifies, the State will be able to borrow an additional ₹7,000 crore.
DISCOM losses
Progressive assumption of responsibility by the States for losses of public sector distribution companies (DISCOMs); transparency in the reporting of the financial affairs of the power sector, including payment of subsidies and recording of liabilities of the State governments to DISCOMs and those of the DISCOMs to others; and timely rendition of financial and energy accounts and timely audit are among the mandatory reforms and performance benchmarks. Once they have been carried out, the performance of the States is evaluated on the basis of the criteria such as percentage of metered electricity consumption against total energy consumption, including agricultural connections, subsidy payment by DBT and the installation of prepaid meters at government offices. All this is to determine the eligibility of the States for additional borrowing in 2021-22.
A senior official in the Union Finance Ministry says that so far, the Centre has allowed two States — Rajasthan and Andhra Pradesh — to go for additional borrowing for undertaking the reforms. Rajasthan has been permitted to borrow ₹5,186 crore and Andhra Pradesh ₹2,123 crore.
As regards Tamil Nadu, sources in the State government say an order has been issued with regard to the progressive assumption of responsibility for losses of the Tamil Nadu Generation and Distribution Company (TANGEDCO). Under the package, the degree of absorption of losses is 50% for the current year (2021-22); 60% for the next year; 75% for 2023-24; 90% for 2024-25; and 100% for 2025-26 and onwards.
The official in the Union Finance Ministry points out that the scope for subjective evaluation of the States on the implementation of reforms has been extremely limited as the idea is to judge the performance of the States against objective parameters. However, there is an element of subjective assessment with regard to innovations and innovative technologies wherein the Union Power Ministry will decide the award of marks. Here too, the maximum marks are only five and an illustrative list of areas has been laid down, the official adds.
