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Nirmala Sitharaman says Centre’s share to be 97,631 Cr for power discom reforms

Sitharaman said that the scheme’ ambit involves installing 250 million smart meters, 10,000 feeders, and 400,000 km of low-tension power transmission lines (PTI)Premium
Sitharaman said that the scheme’ ambit involves installing 250 million smart meters, 10,000 feeders, and 400,000 km of low-tension power transmission lines (PTI)

  • The reforms-based result-linked power distribution sector scheme was announced in the union budget presented earlier this year by her and will subsume programmes such as the Integrated Power Development Scheme, Saubhagya and the Deen Dayal Upadhyaya Gram Jyoti Yojana

NEW DELHI: While announcing the relief package in the wake of the second wave of coronavirus pandemic, finance minister Nirmala Sitharaman on Monday said that the Centre’s share towards the marquee 3.03 trillion power discom reform scheme will be 97,631 crore.

The reforms-based result-linked power distribution sector scheme was announced in the union budget presented earlier this year by her and will subsume programmes such as the Integrated Power Development Scheme, Saubhagya and the Deen Dayal Upadhyaya Gram Jyoti Yojana. The funds will be released to discoms subject to them meeting reform-related milestones.

The scheme is aimed to help reduce losses and improve the efficiency of electricity distribution companies (discoms). There is a compulsory prepaid and smart metering component to be implemented across the power distribution chain.

Mint reported about the proposed scheme on 16 December last year, wherein apart from the government contribution to the scheme’s corpus, the rest will be raised from multilateral funding agencies such as the Asian Development Bank (ADB) and the World Bank.

Sitharaman said that the scheme’ ambit involves installing 250 million smart meters, 10,000 feeders, and 400,000 km of low-tension power transmission lines. She added that state-specific interventions have been planned in place of “one size fits all."

“Participation contingent to pre-qualification criteria like publication of audited financial reports, upfront liquidation of State Government’s dues/subsidy to discoms and non-creation of additional regulatory assets," according to the government presentation made on Monday.

Sitharaman added that states have already been allowed additional borrowing for four years up to 0.5% of Gross State Domestic Product (GSDP) annually, subject to carrying out specified power sector reforms.

Prime Minister Narendra Modi in a recent LinkedIn post wrote that states raised an extra 1.06 trillion in the last financial year, by leveraging their enhanced borrowing limits under the Aatmanirbhar Bharat package that called for carrying out reforms. These qualifying measures included introducing reforms in four areas such as universalization of “one nation one ration card", ease of doing business, power distribution and urban local body revenues.

In an attempt to help shore up the revenues of the states during the first wave of the coronavirus pandemic that originated in Wuhan, China, the union government in May last year raised the borrowing limits for states. The headroom for borrowing for the last fiscal was raised to 5% of GSDP from 3%, subject to the states carrying out specific reforms including recommendations made by the 15th Finance Commission.

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