Power Sector in India - Recent Challenges and Measures Undertaken

Abstract

Efficient and reliable power infrastructure is one of the most important requisite for sustainable and inclusive economic growth in the country. As the GDP of a country grow, so will the demand for power. The objective of this paper is to analyze the current issues and challenges of all the three segments of power namely, generation, transmission and distribution and the measures undertaken by the Government of India. The two largest challenges facing the Indian power sector are fuel supply uncertainty and deteriorating distribution companies (discoms) finances. Considering dominance of coal in India's fuel mix, coal shortages can severely impede investments in the generation segment. Importing coal is not a viable long term option as the major exporting countries are increasingly adopting energy security and resource nationalism- related policies. The need of the hour is to identify and implement solutions with utmost urgency. To revive the discoms the central government has come up with the bailout package yet these packages have only short term benefits. Its long-term benefits will depend on the discoms‟ ability to lower aggregate technical and commercial losses, raise tariffs and limit operational costs. Moreover, instead of taking populist measures, the state governments should focus on improving overall management of the power sector through steps such as reducing power theft, checking leakages, penalizing big defaulters, and improving metering and energy efficiency. It is important to stem the trend of tariff cuts in order to insure that power sector reforms are not derailed. Also, investments in capacity building and modernization are key requisites for improving sector health.