Coming down hard on the states doling out free or cheaper electricity at the expense of distribution companies, Power Minister Jyotiraditya Scindia has said that the cost of such subsidies should be borne by the governments themselves.
“I have no problem if a state Government wants to give subsidy, or even free power. But that free power must be given not on the balance sheet of the discom. That free power must be given on the balance sheet of the state Government,” Scindia said.
Advocating that discoms be kept cash-neutral pursuant to any state subsidy, Scindia said: “It (free or cheaper power) should become a subsidy item in the state Government's balance sheet, and not on the discom's balance sheet, which today is not the case.
“The states say they will give free power, but the losses suffered by the discoms are not bridged from the state government's coffers and in the end it is the discom that suffers. This is the problem.”
While Scindia did not specifically name any state, the Governments have announced plans for or are already providing electricity free of cost or at lower rates to certain sections of the society, such as farmers.
The minister's comments come at a time when financial position of most of the discoms is in bad shape and the Centre's Rs1.9 lakh crore debt restructuring package for these entities is facing roadblocks due to certain reservations expressed by some states.
Noting that the central government also gives a lot of subsidies, Scindia told the news agency in an interview that these subsidies are not given on the balance sheet of any ministry but “from its (central Government's) own balance sheet”.