Andhra carries out power sector reforms, can borrow Rs 1,515 cr

New Delhi, Feb 4 : Andhra Pradesh has become the second state to undertake the power sector reforms stipulated by the Finance Ministry’s Department of Expenditure, and has become eligible to mobilise additional financial resources equivalent to 0.15 percent of its Gross State Domestic Product (GSDP).
As part of the reforms, the state has started Direct Benefit Transfer (DBT) of electricity subsidy to farmers with effect from September 2020, thus successfully implementing one out of the three stipulated reforms in the power sector.
Accordingly, the Department of Expenditure has granted permission to the state to raise additional borrowing of Rs 1,515 crore. This has provided it much-needed additional financial resources to fight the Covid-19 pandemic.
Besides Andhra Pradesh, Madhya Pradesh has also undertaken reforms in the power sector, and was given additional borrowing permission of Rs 1,423 crore, equivalent to 0.15 percent of its GSDP, on January 18.
Power sector reforms stipulated by the Finance Ministry aim at creating a transparent and hassle-free provision of power subsidy to farmers and to prevent leakages. They also aim at improving the health of power distribution companies by alleviating their liquidity stress in a sustainable manner.
As per the guidelines issued by the Department of Expenditure, the states undertaking reforms in power sector are granted permission to raise additional financial resources of up to 0.25 percent of the GSDP. This is linked to a set of 3 reforms in the sector.