Andhra gets Rs 9,000 crores as incentive for power reforms

This additional financial window is dependent on implementation of specific reforms in the power sector by the States.
Image used for representational purpose. (Photo | EPS)
Image used for representational purpose. (Photo | EPS)
Updated on
2 min read

VIJAYAWADA: Andhra Pradesh has secured Rs 9,574 crore cumulative amount of additional borrowing permission for the year 2021-22 and 2022-23 as an incentive for implementing reforms in the power sector.

With an aim to encourage and support States in undertaking reforms to enhance the efficiency and performance of the power sector, the Department of Expenditure, Ministry of Finance, is extending financial incentives in the form of additional borrowing permissions.

The primary objective of granting incentives is to improve operational and economic efficiency within the sector and promote a sustained increase in paid electricity consumption. Further, States are eligible for bonuses for the privatisation of power distribution companies.

Rs 1,43,332 crore incentive for States in 2023-24

Under the initiative, which was announced in the Union Budget 2021-22, an additional borrowing space of up to 0.5 per cent of the GSDP is available to the States annually for a four-year period from 2021-22 to 2024-25. This additional financial window is dependent on implementation of specific reforms in the power sector by the States. The initiative has motivated State governments to initiate the process of making reforms. As a result, several States, including AP, have come forward and submitted details of the reforms undertaken and achievements of various parameters to the Ministry of Power. 

Based on the recommendations of the Ministry of Power, the Finance Ministry granted permission for reforms undertaken in 2021-22 and 2022-23 to 12 State governments. Over the last two financial years, they have been allowed to raise financial resources of Rs 66,413 crores through additional borrowing permissions.

In the financial year 2023-24, States can continue to avail of the facility of additional borrowing linked to power reforms. An amount of `1,43,332 crore has been earmarked as an incentive to States for undertaking these reforms in 2023-24.

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