Privatize power utilities but get regulation right

The government is crafting an ambitious package for private participation in electricity retailing but regulatory reforms must take precedence for its benefits to flow across India

- 

The government is working on a big proposal to relieve state-owned power distribution utilities, which control about 93% of India's consumer supply, of their huge debt burden—provided they privatize their electricity retailing business.

This is one of the most ambitious financial reform initiatives in the power sector in recent history; the annual debt repayment burden of these utilities is around ₹75,000 crore and rising. While the offer is compelling, it is also daunting for state governments. A lighter book would make room for meaningful welfare and development work, efforts that can help win elections. Also, private-sector efficiency holds the promise of better quality and reliability of power supply at competitive rates. However, before that can happen, we may need to overcome public perceptions of privatization being 'anti-people.'