Chart of the Day | The price of inefficiency

It is well known that most states hiked power tariffs last fiscal, some after as many as eight years, amid calls to relieve the pressure on state electricity boards.

As fuel costs increase and some power generator projects come under pressure because their economics don’t work out, the easiest solution put forward is to hike tariffs a bit more.

But, as the chart from Emkay Global Financial Services Ltd shows, actual tariffs in India are pretty close to the rates in China and the US.

In terms of purchasing power parity (PPP), Indian power rates are costlier; the average rate is almost double that in the US.

Hiking tariffs, other than in agriculture, could be counter-productive. The focus for state utilities should perhaps be reducing transmission and distribution losses and power theft.

Also See | (PDF)

PDF by Naveen Kumar Saini/Mint.