Numbers only deepen power sector gloom

Every year the Economic Survey gives a snapshot of the financial status of the power sector. This year too, there’s a table.

Every year the Economic Survey gives a snapshot of the financial status of the power sector. This year too, there’s a table. Only, it narrates a story of slow reforms, of mounting losses and therefore of ever increasing state government subsidies.

Sample this: the rate of return in the sector has fallen from -24.84 per cent in 2005-06 to -27.43 per cent in 2006-07. In financial terms that translates into all-India losses of Rs 26,000 crore against Rs 21,110 crore.

But yes, as in every survey, this one says the return will improve next year, touching -18.59 per cent, close to the level seen in the early 1990s.

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There is also the customary “I told you so”. The survey says the sector could have raised an additional Rs 29,225 crore if tariffs and subsidies were structured in a manner that would fetch the state utilities a 3 per cent return. Trouble is, while this provision was under the old Act, the new Electricity Act of 2003 does not have it.

The emphasis on the need to cut transmission and distribution losses remains — the survey, in fact, targets a reduction from 40 per cent to 15 per cent, citing the Railways magnificent turnaround as a source of potential inspiration.

All said and done, the overall picture for power is nowhere near the claim made for the infrastructure sector as a whole in the survey.