Economic reforms in power sector to eliminate distortions and to maintain economy potentials

Power sector plays an essential part in the economic progress of a nation and it is important to provide for sufficient electricity to provide for appropriate growth outcomes. Power sector plays an essential part in the economic progress of a nation and it is important to provide for sufficient electricity to provide for appropriate growth outcomes. Power sector in India in the pre-independence period was plagued with operational deficiencies like shortages in peak demands of electricity and improper planning of available resources. As a result, there were certain initiatives by the government post-independence to revive the dwindling sector but results were not up to the mark. There were a set of reforms post 1990s again which were implemented with a vision to achieve the required results but to no avail. Reasons behind the apparent failure of reforms have been cited as poor design of reforms and improper allocation of responsibilities. The paper here attempts to review the existing literature and looks at the need of power sector reforms and the path of unfolding of those reforms in India. It further explains the relevant structure of a reform process and why most of the initiatives undertaken did not yield the much awaited outcomes. The various factors as huge losses, poor performance of SEBs, theft and corruption in the power sector has led to the introduction of reforms, are discussed. The paper also discusses the steps taken and to be taken by the center and the states governments, introduction of new Electricity Bill, rationalization of tariffs and protection of the laws of the land provided to the private sector. In the last, it is concluded that the success of the reforms lies in the co-operative actions of the center and the state governments. Reasons behind the apparent failure of reforms have been cited as poor design of reforms and improper allocation of responsibilities. The paper here attempts to review the existing literature and looks at the need of power sector reforms and the path of unfolding of those reforms in India. It further explains the relevant structure of a reform process and why most of the initiatives undertaken did not yield the much awaited outcomes.