The Central Government has earmarked Rs 1,43,332 crore as a financial incentive for power sector reforms to enhance the efficiency of the sector for the fiscal year 2023-24. Earlier an amount of Rs 66,413 crore was granted for reforms undertaken in 2021-22 and 2022-23, the Ministry of Power said on Wednesday.

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Under the initiative, an additional borrowing space of up to 0.5 percent of the Gross State Domestic Product (GSDP) is made available to the states annually for a four-year period from 2021-22 to 2024-25, according to an official release.

Under the initiative, states like Andhra Pradesh will get a cumulative amount of additional borrowing permission worth Rs 9,574 crore. West Bengal will get Rs 15,263 crore, Uttar Pradesh Rs 6,823 crore, Tamil Nadu Rs 7,054 crore, Kerala Rs 8,323 crore, and Himachal Pradesh will get Rs 251 crore.

The financial incentive will depend on the implementation of specific reforms in the sector by the states.

Several states had come forward and submitted details of the power sector reforms undertaken by them along with the details of the achievements of various parameters to the Ministry of Power.

The amount of Rs 1,43,332 crore is made as an incentive to states for undertaking the reforms.

States that failed to complete the reform process in the past two years may also benefit from the additional borrowing if they carry out the reforms in the current financial year.

The primary objectives of the incentives are to improve operational and economic efficiency within the sector and promote a sustained increase in paid electricity consumption.

However, to be eligible for the incentives, the state governments need to undertake the mandatory reforms outlined by the Centre. They must also meet stipulated performance benchmarks which will be evaluated to determine their eligibility.

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The required reforms include transparency in the reporting of financial affairs of the power sector, timely rendition of financial and energy accounts, timely audit, and compliance with legal and regulatory requirements.

Once the specified reforms are implemented, a state’s performance will be evaluated based on stipulated criteria to determine eligibility and the incentive amount.

The incentive amount may range from 0.25 percent to 0.5 percent of GDP, according to the Power Ministry.

The Ministry of Power will assess the performance of states and determine their eligibility for the grant of additional borrowing permission.

(Edited by : Sudarsanan Mani)