The Planning Commission today asked the States to increase electricity charges and use power subsidy to improve essential services like drinking water, education and health.
Only rationalisation of tariff, the Commission argued, can ensure sustainable growth of the ailing power sector, which is essential for promoting inclusive growth.
“The way the current situation (can) be handled is through some combination of tariff increase and serious efforts to reduce AT&C losses,” Planning Commission Deputy Chairman Montek Singh Ahluwalia said while addressing the States’ Power Ministers conference in New Delhi.
He also cautioned that States which had failed to raise power charges regularly would be required to make steep adjustments.
“Many States which have not adjusted tariff for 10 years in a row and assume that even a simple inflation adjustment of 5 per cent ... they (may) need to adjust it by 60 per cent,” Mr Ahluwalia added.
In the power and energy sector, he said, “we need to recognise that the objective of inclusive growth will not be met if the power sector is not put on economically sustainable basis.”
In an economically sustainable model, he said, the subsidy should be there for only certain category of people.
The States should not waste money for subsidising power but should use the funds for providing basis facilities like drinking water, education and health, he said.
This man should be thrown out of the planning commission office, How rediculous it is, person who spend 33 lakh for Toilet renovation speaks about poor! Every time when you face losses increase the prices, will it fix the tinks? It definetly will put extra burden on poor who already suffering the spiralling prices of basic necessities while for reach it will not make any difference. There are many other ways to recover the loss not only the price hike, like by improving the infrastructre, reduce the power losses and eliminating the power theft. Every time govt. face such problems they put the burden on aam aadmi but never care to make the policies which will improve the situation. It shows how India going thruogh a complete policy paralysis in every sector.
Most of the SEB'S rae at a loss because of poor recovery of dues, indiscriminant power theft, corruption amongst the officials, higher cost because of inefficient management etc. These must be taken proper care of as a sustainable solution instead of price rise as the only remedy.
No useful purpose will be served in passing general remarks.The country is facing severe power shortage.The defects on the part of the state governments concerned should be specific for time bound remedial action.
I really don't understand how India can change. There is no need to increase the price each time to improve the financial health. Look for other options, improve the infrastructure. For example, I live in Texas, US, here summer is very hot like Chennai (more than 90 F and some times it can be 110 F). I use air condition 24/7 for those four months for a 750 sq apartment, I pay around $50 per month, equivalent of Rs 2500 (Rs 50/1$). And I maintain at 78F and the entire house is temp controlled. How it is possible? Better infrastructure, period.
India has to change / people mindset has to change. With the internet, data available, anyone can find how it is done in other parts of the world. It is not rocket science to implement these.
Increasing price is not the only way to fix things.
With prices of all basic commodities swelling, Why Mr. Montek is targeting the poor people ? Electricity is a basic requirement for all sections of people in the society. It will hardly matter for rich families to pay some extra money in their monthly electricity bill, but a poor family will be on verge of tears. If Mr Montek is really concerned for generating subsidies for improving essential services, why don't he suggest a hike in some low priority item instead of items of basic requirement. He should recommend steps for reducing the power losses, eliminating power thefts. That will surely generate desired subsidy amount.
The Deputy Chairman of planing commission, being a non-elected person,
only could talk logic. The political leadership, being spineless, acts
as a seismograph for popular public demand. In doing so the aforesaid
comments form basis of policy making and subsidies after subsidies
continue to burden the state exchequer. Any deviation, even if
remotely viewed as detrimental to vote bank is not taken kindly by the
political leadership. Unceremonious removal of Mr Tiwari from
Railway portfolio is an instance to be noted. Therefore I will request
the learned readers to reconsider the proposition of Mr Dy Chairman.
After all a gentle doctor only leaves a putrid wound.
What is his plan for central power grid and transmission. Increase of
cost is because we buy power from private firms. What are the plans to
make our country power surplus. What is the plan to reduce transmission
loss. What is the plan to expand the power grid for transmission. Where
are the experts?
Montek is unfit to hold any decisive position in govt. It is because of vote bank politics Indian's are penalised. there is no accountability for these demi-politicians. It is high time that the govt leases out Indian Govt to the likes of Ambani group.
The Government should slowly but steadily move away from the subsidy regime. I am apalled at the comments given by some of the readers here. What Montek Singh has stated is correct. The States cannot indefinitely postpone raising the tariffs of essential services utilized by our beloved "Aam Aadmi". Every now and then, the cost should be adjusted for inflation and production costs. Of course there is a great need for reducing Transmission losses and Theft. These subsidies on one side is piling up our taxes on the other side. If we carefully note, the service tax imposed by the Center is such a burden that kept growing each decade. Now if we have a correct tariff for the actual service offered, we need not tax another gentleman who uses his phone so much, but swicthes his AC on.
I agree with Dr. Ahluwalia here. The State must focus on providing bare
essentials to the disadvantaged and not waste tax-payer money on
providing power subsidies. Its an ineffecient usage of capital. I humbly
request my fellow middle-class commentators above to be mindful of the
appalling conditions in which the poor live and stop expecting Govt.
subsidies for their energy usage.
Ahluwalia is absolutely right! Subsidy should be limited to only the poor. Any one who uses more than a specified unit of power (say 200 units per month) should pay higher charges.
Power is one of the basic necessities today which should be noted. Planning Commission is not a statutory body nor it’s a constitutional one, still its deputy chairperson exhibits such authority it is unfortunate that this planning commission has come to mix itself with actual process of the formation of public policies even in matters other than development.
Sir! These statements clearly reflect the sought of policy paralysis in power management.In the first place what lead you to do improper estimation and you say to increase tariffs this is going to increase manufacturing costs and there by inflation substantially.How can this happen?
This gentleman's suggestion is for the benefit of the poor people like Ambanis,Tatas,Mallayas etc. Because this guy has also suggested to handover NTPC,& other PSU to the Pvt sector/Foreign investors but before that the tariff should be increased so that our above mentioned poor people can come above poverty line like our 90% people have.
This guy is having good plans for posh toilets. Insists to increase the
power tariff in states, build posh toilets and later justify it...
Good move high time we learn the value of ELECTRICITY well we always have money to buy GOLD no matter what the price is why are we not willing to pay for something that makes our life BRIGHT-Electricity ???
This guy is not fit to hold sny official positions his utternces creating more anger and
snguish among the am admi. This guy is not able to solve the problem but creating
problem to am admi . Guy is jutifying the 33lakhs expenses on kakkus and what can
u expect u from him.
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