CHENNAI: The Centre has allowed 10 States to borrow an additional amount of Rs 28,204 crore for undertaking power sector reforms during 2021-22.
Tamil Nadu can raise additional loans to the extent of Rs 7,054 crore, highest among all 10 States, and Tamil Nadu Generation and Distribution Corporation (TANGEDCO) may get the funds for power sector reform works including metering of all connections including agricultural services.
Based on the recommendations of the 15th Finance Commission, the Centre had decided to allow States an additional borrowing limit of up to 0.5 per cent of their Gross State Domestic Product (GSDP) every year for a four-year period from 2021-22 to 2024-25 based on reforms undertaken by them in power sector.
As per the Union finance ministry, power sector reforms to be carried out by the States include transparency in reporting financial affairs of the sector such as payment of subsidies, proportion of metered electricity consumption to total energy consumed in a State, including agricultural connections, subsidy paid through direct benefit transfer (DBT), payment of electricity bills by government departments and local bodies, installation of prepaid meters in government offices, and use of innovations and innovative technologies.
Once the reforms were undertaken by the States, the Centre would evaluate them to determine the eligibility of the State for additional borrowing for a particular year. States will also be eligible for bonus points for privatisation of power distribution companies.
The Ministry of Power is the nodal authority for assessing performance of States and determining their eligibility for additional borrowing. The finance ministry has said that in financial year 2022-23, too, States can utilise the facility of additional borrowing linked to power sector reforms, and Rs 1,22,551 crore has been earmarked for that.