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.
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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.”
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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.