Efficient distribution sector essential for improving ease of doing business: Niti Aayog VC

Niti Aayog Vice Chairman Rajiv Kumar on Tuesday said a healthy and efficient distribution sector is essential for improving the ease of doing business, and for improving ease of life. Releasing a report titled ‘Turning Around the Power Distribution Sector’, Kumar said the report examines many important reforms such as the role of the private sector in distribution, power procurement, regulatory oversight, integration of renewable energy, and upgradation of infrastructure.

“A healthy and efficient distribution sector is essential, whether for improving the ease of doing business, or for improving the ease of life,” an official statement said, quoting Kumar. The report is co-authored by Niti Aayog, RMI and RMI India. According to a statement, Niti Aayog member V K Saraswat said that this report presents policymakers with a menu of reform options to put the distribution sector on the track of efficiency and profitability. Most power distribution companies (discoms) in India incur losses every year- total losses are estimated to be as high as Rs 90,000 crore in FY2021, as per the statement.

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Due to these accumulated losses, discoms are unable to pay generators on time, make investments required to ensure high-quality power, or prepare for greater use of variable renewable energy, it added. As per the statement, the report presents a review of reform efforts in the Indian and global power distribution sector and it extracts the learnings and best practices from the wealth of policy experience that exists in the country. Highlighting the need for addressing current challenges, Clay Stranger, Managing Director, RMI said,

“A robust and long-lasting solution to the woes of the discoms requires changes in policy as well as organisational, managerial, and technological reforms. “Different states have travelled along different pathways of reforms, giving a rich set of policy experiments to learn from,” Stranger noted.