How state governments are pushing India towards “darkness”

Emboldened by the freebies politics, state governments are pushing India towards darkness. Corrupt governance structure and popular policies have rotten the financial conditions of states. In an effort to capitalise first past the post system of elections, state governments have successively adopted unsustainable policies and have strangulated the financial viability of projects. The top sector which has sustained the most loss, due to the corrupt policy, is the power sector.

States owed 2.5 lakhs crores rupees to electricity companies

PM Modi at the launch of the Ministry of Power’s flagship Revamped Distribution Sector Scheme highlighted the payment crisis in the electricity sector. Revealing the data about the state’s dues payment to electricity generating and distribution companies, the PM said,” the power companies are generating enough power but still do not have the necessary funds. On very rare occasions, the distribution companies get their money on time. There are huge dues and arrears on the part of state governments”.

“Bills of more than Rs 1 lakh crores are pending in different states. They need to give this money to the power generation companies. They need to take electricity from them, but they are not giving the money. Government departments and local bodies owe more than 60 thousand crores rupees to many power distribution companies”, PM said.

And the challenge doesn’t end there. These companies are not able to get even promised subsidy money fully and on time. These dues amount to more than 75 thousand crores rupees. That is, about 2.5 lakh crores rupees of those responsible for the generation of electricity and doing door-to-door delivery have not yet been received by them, PM added.

For long, India’s power sector has been plagued by the vicious cycle of under investment and pending dues.
It is time state governments address this issue of pending dues to ensure that the people of our country get good power supply. pic.twitter.com/a5v5KgpTrh
— Narendra Modi (@narendramodi) July 30, 2022

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Mostly opposition ruled states are defying payments

It is pertinent to understand that state governments ruled by regional parties are mainly involved in the freebies culture. At the peak of the election, they announce to write off or provide unsustainable subsidies to people. To vow votes and win elections, they promote ‘Revadi Culture’ in administration. In this effort, with limited budget resources, states run out of funds and encircle themselves in the vicious cycle of subsidy payment. This financial mismanagement not only affects the revenue expenditure but capital investment becomes difficult.

A report of the Power Ministry states, of about 1 lakh crores outstanding due to power generation companies, Maharashtra (Rs 21,656 crores), Tamil Nadu (Rs 20,990 crores), Andhra Pradesh (Rs10,109 Crores), Telangana (Rs 7,388 Crores) and Rajasthan (Rs 7,388 Crores) owes major chunk.

Similarly, of about 60 thousand crores outstanding due to power distribution companies, Telangana (Rs 11,935 crores), Maharashtra (Rs 9,131 crores), Andhra Pradesh (Rs 9,116 crores), and Tamil Nadu (Rs 3,677 crores) owe a major chunk.

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Further, of 75 thousand crores of subsidy bills, Rajasthan (Rs 15,597 crores), Punjab (Rs 9020 crores), Maharashtra (Rs 3399 crores), and Chhattisgarh (Rs 2699 crores) form the major chunk.

These outstanding bills are the result of the freebies politics of state governments. States create a drought of cash by short-circuiting their source of revenue and endanger financial health. To sustain development and growth, capital investment should be the top priority of every government. In capital investment, the infrastructure of power and energy are the foundational pillars. Deviating from the investment in the energy sector will lead India into the “darkness”.