New Delhi (NVI): Andhra Pradesh has become the second state to undertake the power sector reforms stipulated by the Ministry of Finance and get permission to mobilise additional assistance of Rs 1,515 crore through open market borrowings.
In a statement, the Finance Ministry said, as part of the reforms, Andhra Pradesh has started Direct Benefit transfer (DBT) of electricity subsidy to farmers with effect from September, 2020.
With this, the state has successfully implemented one out of the three stipulated reforms in the power sector.
The successful implementation of the reform has made the state eligible to mobilise additional financial resources equivalent to 0.15 percent of its Gross State Domestic Product (GSDP), the ministry said.
“Accordingly, the Department of Expenditure has granted permission to the State to raise additional borrowing of Rs 1,515 crore. This has provided the much needed additional financial resources to the State to fight COVID-19 pandemic,” it added.
Besides, Andhra Pradesh, Madhya Pradesh has also undertaken reforms in the power sector and the state was given additional borrowing permission of Rs 1,423 crore, equivalent to 0.15 percent of its GSDP on January 18.
Further, the statement said that, power sector reforms aims at a transparent and hassle free provision of power subsidy to farmers and prevent leakages.
They also aim at improving the health of power distribution companies by alleviating their liquidity stress in a sustainable manner.
As per the guidelines, the States undertaking reforms in power sector are granted permission to raise additional financial resources of up to 0.25 percent of the GSDP.
This is linked to a set of three reforms in the sector. First, 0.05 per cent of GSDP for reduction in Aggregate Technical & Commercial losses in the state as per prescribed targets, ministry noted.
“Second, 0.05 per cent of GSDP is allowed for reduction in the gap between Average Cost of Supply and Average Revenue Realisation (ACS-ARR gap) in the state as per prescribed targets,” it added.
Finally, 0.15 per cent of GSDP of the state on introduction of Direct Benefit Transfer (DBT) to all farmers in the State in lieu of free/ subsidized electricity.
For this, the state government has to frame a scheme for transfer of cash and implement the scheme in at least one district by December 31, 2020, the ministry informed.
Moreover, Andhra Pradesh has framed a DBT scheme for agricultural consumers in the State and the scheme has been implemented in Srikakulam district with effect from September last year.
The state has also informed that the DBT scheme will be rolled out in the entire state from April, 2021 onwards.
In view of the resource requirement to meet the challenges posed by the COVID-19 pandemic, the government on May 17, 2020 enhanced the borrowing limit of the states by 2 percent of their GSDP, the statement read. “Half of this special dispensation was linked to undertaking citizen centric reforms by the states,” it said.
The four citizen centric areas identified for reforms were, Implementation of One Nation One Ration Card System, Ease of doing business reform, Urban Local body/ utility reforms and Power Sector reforms.
Beside, power sector reforms, Andhra Pradesh has also completed One Nation One Ration Card reform, Urban Local Bodies Reforms and Ease of Doing Business Reforms.
However, the state has been granted permission to raise a total additional amount of Rs 9,190 crore as incentive to carry out reforms in these citizen centric areas.
So far, 16 States have carried out at least one of the four stipulated reforms and have been granted reform linked borrowing permissions. The total reform linked additional borrowing permission issued to the states stands at Rs 73,257 crore, the statement added.
-RJV
