High-voltage reforms

Draft power law could be a game changer

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The power sector was among the first to be opened up to private investment and structural reform in the early nineties. Since then, however, it has remained an underperformer relative to India's economic growth, requiring consistent government intervention. The principal reason for this is political: The massive subsidies that states have historically doled out to perceived vote-sensitive segments of the population. The result is that private investment in power generation has been robust private generators account for more than half India's installed capacity -but power distribution remains mostly in the realm of shambolic state-owned enterprises, dependent on borrowing and heavy cross-subsidies by industry and rail utilities to finance underrecoveries. This deep-rooted infrastructural inefficiency has dragged down India's manufacturing competitiveness in the form of high electricity costs. Four bailout packages over the past two decades have failed to reduce state-owned discom dues to power generators. Discoms are facing accumulated