Get power tariffs right, please

Offering free electricity is regressive; focus on tariff rationalisation and targeted subsidy

The recent tariff subsidy bonanza announced in New Delhi for residential consumers of electricity — of up to 200 units/month — might gratify the public, but goes against economic rationale. Instead, tariff rationalisation and targeted subsidy would go a long way in sustaining the reform momentum started by the Ujwal Discom Assurance Yojana (UDAY). UDAY focused on turnaround of distribution companies (discoms) through cost reduction and improvement in operational efficiency. While it has improved some operational and financial aspects, discoms remain utterly fragile.

The UDAY dashboard shows reduction in aggregate technical and commercial (AT&C) loss to about 22 per cent.