State electricity boards (SEBs) are not exactly in the pink of health. Their debts exceed 3 trillion and their accumulated losses too are close to 3 trillion. Of the weak SEBs, Rajasthan stands out and has the biggest chunk of debt and losses.

The Rajasthan government now wants to offer its power-generating plants to the central power sector PSU NTPC Ltd.

This may suit Rajasthan’s purposes, but it may not be a good bet for NTPC. The demand for power has not kept pace with generation. This is largely due to weak demand from cash-strapped SEBs.

It makes sense for a company to buy generation assets if demand is robust. But for that to happen, automatic price adjustments have to take place at the distribution end. State governments are unwilling to do that. So, the net result is a cyclical nature of power sector crises in India. It is the distribution end of the power business that needs reforms. Fire sales won’t help everyone.