India’s power distribution companies (discoms) remain trapped in a cycle of mounting losses. Can the government’s latest ‘Reforms-Linked, Result-Based Scheme for Distribution’ (RLRBSD) aims to curb inefficiencies and improve their financial health The power distribution companies (discoms) stand at the core of the power supply and distribution network in the country. Mostly owned and controlled by State Governments, they buy electricity from the generating companies (gencos) and supply it to the consumers. Yet, invariably, the financial health of discoms has been a matter of serious concern. According to a report by the Lok Sabha’s Standing Committee, the accumulated losses of discoms increased from Rs 545,000 Crores in financial year (FY) 2020-21 to Rs 584,000 Crores in 2021-22, Rs 647,000 Crores...
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Spiralling food subsidy: The urgent need for reform
India’s food subsidy bill continues to rise despite budget projections suggesting otherwise. Without structural reforms in procurement and distribution, the financial strain on the exchequer is set to escalate, raising concerns about the long-term sustainability of India’s food security programmes In the Union Budget for 2025-26, Finance Minister Nirmala Sitharaman has allocated Rs 203,420 Crore for food subsidy which is a marginal three per cent increase from the revised estimate (RE) for the current financial year (FY) at Rs 197,000 Crore. The RE for FY 2024-25 by itself is lower than the budget estimate (BE) of Rs 205,250 Crore she had fixed while presenting that budget on July 23, 2024. Food subsidy payments during FY 2023-24 and FY 2022-23 were...
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Finding money for ‘freebies’: BJP faces an uphill task
The challenge now is not just about delivering on electoral promises but also about balancing an already precarious fiscal equation that could see deficits skyrocket Having swept the polls in the National Capital Territory (NCT) of Delhi with a clinching 2/3rd majority, Rekha Gupta-led BJP – government faces the daunting challenge of having to find money to fulfil its poll promises. Amongst others, the BJP had promised Rs 2,500 a month to women under Mahila Samridhi Yojana (MSY); Rs 21,000 to pregnant women; LPG cylinders for Rs 500 and free cylinder on Holi and Diwali; a stipend of Rs 1000 a month to SC students pursuing technical and vocational courses; free education for needy students from KG to PG; free travel...
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RBI should go for an ‘accommodative’ stance
While inflation has been steadily declining, the RBI opted to retain its ‘neutral’ stance, signaling a measured approach rather than give push to boost liquidity and demand On February 7, 2025, the Reserve Bank of India (RBI) Governor Sanjay Malhotra announced the decisions taken by the six-member Monetary Policy Committee (MPC) in its sixth bi-monthly meeting of the current financial year (FY). It has reduced the policy rate or the repo rate (the interest rate at which the RBI lends to banks) by 25 basis points to 6.25 per cent. This marks the first repo rate cut in nearly five years. Moreover, it has continued with a neutral stance which it shifted in its fourth bi-monthly review/announcement on October 10,...
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Balancing growth with fiscal discipline
Key measures, including tax reliefs and incentives for private sector, reflect a balanced approach to making India a developed economy by 2047 A theme that reverberates in the Union Budget for FY 2025-26 presented by Finance Minister Nirmala Sitharaman on February 1, 2025, is ‘sustaining the momentum of high economic growth alongside sticking to fiscal consolidation’. During FY 2024-25, the GDP growth (gross domestic product) is estimated at 6.4 per cent which is more or less close to the 6.5 per cent – 7 per cent projected in the Economic Survey (ES) for 2023-24 presented by Sitharaman in the Parliament on February 1, 2024. For FY 2025-26, according to the Economic Survey presented by her on February 1, 2025, the...
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US sanctions: A bold move or another futile attempt
The US has imposed a fresh round of sanctions on Russia’s energy sector in a bid to cut its oil revenue. The crucial question remains: Will these measures be effective On January 10, 2024, the outgoing Biden administration of the United States of America (USA) made public its latest round of sanctions on Russia aimed at cutting the latter’s income from energy sales. These sanctions seek to target two large producers, as well as insurers, traders and more than 180 vessels carrying Russian oil. The US Office of Foreign Assets Control – the agency tasked with enforcement of the sanctions – has set a deadline of February 27, 2024, for the delivery of all crude cargoes that were loaded on...
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Freebies could push Delhi to fiscal disaster
Despite repeated warnings from the Supreme Court about the detrimental impact of freebies on free and fair elections, political parties continue to offer them In the din of blistering campaign in Delhi with the central theme of major political parties being on “freebies” – an acronym for ‘something given free of charge’ – it may be worthwhile to remind them about two observations made by the Supreme Court (SC). In an order in S Subramaniam Balaji vs the Government of Tamil Nadu & Ors given in July 2013, the SC had observed that the distribution of freebies of any kind influences all people. “It shakes the root of free and fair elections to a large degree.” A decade later, hearing a...
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LPG subsidies: Give it to the poor and needy
As state-owned oil companies grapple with massive losses from selling LPG below cost, the Govt is set to allocate Rs 35,000 crore in subsidies to mitigate the financial burden During the current financial year (FY) 2024-25, the state-owned Indian Oil Corporation Ltd (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) are expected to incur an under-recovery of Rs 19,550 crore, Rs 10,400 crore and Rs 10,570 crore respectively on sales of LPG to household consumers. To make up for this loss totalling Rs 40,500 crore, the Union Government is likely to provide a subsidy of Rs 35,000 crore. In the Budget for 2025-26, to be presented on February 1, 2025, Finance Minister Nirmala Sitharaman will make...
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Relief from high power bills: Delhiites are chasing a mirage
A significant reduction in the Power Purchase Adjustment Cost levied by Delhi power companies have raised eyebrows due to their timing and magnitude On December 26, 2024, the Delhi Electricity Regulatory Commission (DERC) announced a reduction in the Power Purchase Adjustment Cost (PPAC) imposed by the three power distribution companies (discoms) in Delhi: BSES Rajdhani Power Limited (BRPL), BSES Yamuna Power Limited (BYPL), and Tata Power Delhi Distribution Limited (TPDDL). The reductions, ranging from 50 per cent to 60 per cent, require scrutiny. What is PPAC? To understand this and its implication for the electricity bills of Delhiites, let us capture some basics. The discoms are expected to sell electricity to the consumers at tariffs – duly approved by the...
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Farmers shunning use of nano-urea despite promotion
Despite a strong push from the government and ambitious targets for production and adoption, the fiscal year 2023-24 witnessed a sharp 43 per cent drop in nano-urea sales Last year, around this time, the Union Minister for Chemicals and Fertilisers Mansukh Mandaviya had said “Consumption of urea this fiscal (read: FY 2023-24) is likely to be 8 percent less than in FY 2022-23 due to the use of its liquid nano variant. Because of this and higher domestic production, import of urea, the soil nutrient that accounts for 70 percent of the fertilizer subsidy bill, declined more than a fifth on year in 2023. Further spread of nano urea consumption and the start of a new large urea plant (Talcher...
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