Reports suggest that a debt restructuring plan is being prepared for power distribution companies (discoms) in seven states - Uttar Pradesh, Punjab, Rajasthan, Haryana, Andhra Pradesh, Tamil Nadu and Madhya Pradesh. According to some estimates, the combined outstanding debt for discoms is Rs 2 lakh crore. Discoms have been facing heavy losses. According to a Planning Commission Report, the cost of supplying electricity increased at a rate of 7.4 per cent annually between 1998-99 and 2009-10. The average tariff has also increased at an annual rate of 7.1 per cent over the same period. However, the report shows that the average tariff per unit of electricity has consistently been much lower than average cost of supply per unit. Between 2007-08 and 2011-12, the gap between average cost and average tariff per unit of electricity was between 20 and 30 per cent of costs.
Average cost and average tariff per unit of electricity (Rs per kWh)
|
Year |
Unit cost |
Average tariff per unit |
Gap between cost and tariff |
Gap as percentage of unit cost |
| 2007-08 |
4.04 |
3.06 |
0.98 |
24% |
| 2008-09 |
4.6 |
3.26 |
1.34 |
29% |
| 2009-10 |
4.76 |
3.33 |
1.43 |
30% |
| 2010-11 |
4.84 |
3.57 |
1.27 |
26% |
| 2011-12 |
4.87 |
3.8 |
1.07 |
22% |
Source: “Annual Report 2011-12 on the Working of State Power Utilities and Electricity Departments”, Planning Commission State discoms have been losing money due to higher costs than revenues, as well as high transmission and distribution (T&D) losses. The commercial losses for discoms in India (after including subsidies) increased from Rs 16,666 crore in 2007-08 to Rs 37,836 crore in 2011-12. Reports suggest that the restructuring plan being prepared will be worth Rs 1.2 lakh crore in short-term liabilities. Half of the proposed amount would be issued as bonds by the discoms, backed by a state government guarantee. Banks and financial institutions would reschedule the remaining Rs 60,000 crore of debt, with a moratorium of three years on payment of the principal amount. State governments that adopt the financial restructuring plan would not recover any loans given to discoms before they start showing profits. Under a proposed transition finance mechanism, the central government would reimburse 25 per cent of the principal amount of bonds to states that fully implement the plan. Also, states that achieve a reduction in T&D losses above a targeted level in three years may be given grants. Newspaper reports also suggest that states will have to prepare plans for eliminating the gap between the average cost and average tariff per unit of electricity.
Anirudh and Chakshu Friday's issue of Indian Express carried an op-ed article by the Director of PRS on the issue of the re-establishment of the Legislative Council (upper house) in Tamil Nadu. The article (a) traces the history of the legislature in Tamil Nadu, (b) the efficacy of having upper houses in state legislatures, (c) arguments for and against having legislative councils in state legislatures, and looks at the larger issue of how efficiently state legislatures perform their expected role. General information on Legislative Councils in India: The Legislative Council (Vidhan Parishad) of a state comprises not more than one-third of total number of members in legislative assembly of the state and in no case less than 40 members (Legislative Council of Jammu and Kashmir has 36 members vide Section 50 of the Constitution of Jammu and Kashmir). Elections: (a) About 1/3rd of members of the council are elected by members of legislative assembly from amongst persons who are not its members, (b) 1/3rd by electorates consisting of members of municipalities, district boards and other local authorities in the state, (c) 1/12th by electorate consisting of persons who have been, for at least three years, engaged in teaching in educational institutions within the state not lower in standard than secondary school, and (d) one-twelfth by registered graduates of more than three years standing. Remaining members are nominated by Governor from among those who have distinguished themselves in literature, science, art, cooperative movement and social service. Legislative councils are not subject to dissolution but one-third of their members retire every second year. The points below provide more information on the Tamil nadu legislative Council: - The Government of India Act, 1935 established a bicameral legislature in the province of Madras. - May 14, 1986 [eigth assembly] the government moved a resolution for the dissolution of the Legislative Council. The resolution was passed. - The Tamil Nadu Legislative Council(Abolition) Bill, 1986 was passed by both the Houses of Parliament and received the assent of the president on the 30th August 1986. The Act came into force on the 1st November 1986. The Tamil Nadu Legislative Council was abolished with effect from the 1st November 1986. - February 20, 1989, [ninth Assembly] a Government Resolution seeking the revival of the Tamil Nadu Legislative Council was moved and adopted by the house - The Legislative Council Bill, 1990 seeking the creation of Legislative Councils of the Tamil Nadu and Andhra Pradesh was introduced in Rajya Sabha on the 10th May 1990 and was considered and passed by the Rajya Sabha on the 28th May 1990. But the Bill could not be passed by the Lok Sabha. - October 4, 1991, [tenth Assembly] a Government Resolution was adopted in the Assembly to rescind the Resolution passed on the 20th February 1989 for the revival of the Legislative Council in the State of Tamil Nadu. - July 26, 1996, [eleventh Assembly], a Government Resolution seeking the revival of the Tamil Nadu Legislative Council was moved and adopted by the house.
