Andhra Pradesh enters vortex of power reforms for more borrowing

Vijayawada: The proposal of Andhra Pradesh for allowing additional borrowing space to the state by the Centre for undertaking and sustaining specific reforms in the power sector has not only benefited the state but others too in the country.

In the process, the state has entered the vortex of reforms in the power sector that would suck it further into several changes in the power tariff in future. The state can not even step back from it now having agreed to the reforms and borrowed money. The Centre is dangling the carrot of Rs 80,000 crore additional borrowing space for the states in the near future if those continue with the reforms.

However, once any state embarks on it, it would be taken to a logical end by the Centre and the state will be forced to enact the reforms at any cost, it is said.

"The additional borrowing limit permitted for power sector reforms is 0.5 per cent of the Gross State Domestic Product (GSDP) of the respective state. This being the first year of the current version of the scheme, the requirements of reforms and actions have been kept less onerous, with the bar raised for future years, pushing the states towards higher level reforms. Under the scheme, the states may commit to reforms and be eligible for increased borrowing space of Rs 80,000 crores. This scheme adopts a novel approach to incentivise the states, to commit to reforms and in turn, take benefit in the form of availability of enhanced financial resources," the finance ministry stated on Tuesday.

In current times, wherein massive infrastructure has already been deployed under flagship Central schemes and having met the target to make available the power supply across all willing households, the Centre "is directing its focus towards making the sector operations more robust, efficient and sustainable, with the end objective to make available 24x7, quality, reliable and affordable power to all consumers".

Thus, the funding under Centrally-sponsored schemes has now been made contingent upon the reforms that any state is willing to undertake and provide corresponding financial support to the progressive state governments in being able to achieve this.

AP is on the top of the list of such "progressive States", it is said.