With 4,203 confirmed cases of COVID-19, Maharashtra has the highest number of cases in the country as of April 20, 2020. Of these, 507 have been cured, and 223 have died. In this blog, we summarise some of the key decisions taken by the Government of Maharashtra for containing the spread of COVID-19 in the state.
Measures taken prior to lockdown
By March 12, the state had registered 11 cases of COVID-19. Consequently, the state government took measures to: (i) prepare hospitals for screening and testing of patients, and (ii) limit mass gathering given the highly contagious nature of the disease. The measures taken by the government before the lockdown are summarised below.
Health Measures
On March 14, the government notified the Maharashtra COVID-19 regulations to prevent and contain the spread of COVID-19 in the state. Key features of the regulations include: (i) screening of COVID-19 patients in hospitals, (ii) home quarantine for people who have travelled through the affected areas, and (iii) procedures to be followed in the containment zones, among others.
Movement Restrictions
On March 15, with 31 COVID-19 cases in the state, the Department of Public Health ordered the closure of cinema halls, swimming pools, gyms, theatres, and museums until March 31. On March 16, all educational institutions and hostels in the state were closed till March 31. The teaching staff was advised to work from home. All exams were also deferred until March 31.
Administrative Measures
On March 13, the Maharashtra government constituted a high-level committee to formulate guidelines for mitigating of the spread of COVID-19 in the state. The responsibilities of the committee included: (i) taking a daily review of the status of COVID-19 in the state, and (ii) implementing the guidelines issued by the World Health Organisation and the Ministry of Health.
On March 17, the first casualty due to COVID-19 occurred in the state. On March 19, the government put restrictions on meetings in the government offices and issued safety guidelines to be followed in these meetings.
On March 20, considering the unmitigated spread of COVID-19 in Mumbai, Pune and Nagpur, the attendance in government offices was restricted to 25%. Subsequently, on March 23, the government limited the attendance in government offices to 5% across the state.
Measures taken post-lockdown
To further restrict the movement of individuals, in order to contain the spread of the disease, the state government enforced a state-wide lockdown on March 23. This lockdown, applicable till March 31, involved: (i) closing down of state borders, (ii) suspension of public transport services, and (iii) banning the congregation of more than five people at any public place. Entities engaged in the supply of essential goods and services were excluded from this lockdown. This was followed by a nation-wide lockdown enforced by the central government between March 25 and April 14, now extended till May 3. Before the extension announced by the central government, the state government extended the lockdown in the state till April 30.
On April 15, the Ministry of Home Affairs issued guidelines on the measures to be taken by state governments until May 3. As per these guidelines, select activities will be permitted in less-affected districts from April 20 onwards to reduce the hardships faced by people. Some of the permitted activities are (i) agriculture and related activities, (ii) MNERGA works, (iii) construction activities, (iv) industrial establishments, (v) health services, (vi) certain financial sector activities among others subject to certain conditions.
Welfare Measures
To address the hardship being faced by residents of the state due to lockdown, the state took several welfare measures summarised as follows:
On March 30, the School Education Department issued directions to all schools in the state to postpone the collection of school fees until the lockdown is over.
The Department of Tribal Development issued directions to provide food/dietary components at home to women beneficiaries and children under Bharat Ratna Dr A.P.J. Abdul Kalam Amrut Aahar Yojana.
The state government issued directives to the private establishments, industries and companies to pay full salaries and wages to their employees.
On April 7, the state Cabinet decided to provide wheat and rice at a subsidised price to all Above Poverty line ration card holders and Shiv Bhojan at Rs 5 for next three months in all Shiv Bhojan centres.
On April 17, the Housing Department notified that landlords/house owners should defer the rent collection for three months. No eviction will be allowed due to non-payment of rent during this period.
Administrative Measures
On March 29, the public works department issued directions suspending the collection of tolls at PWD and MSRDC toll plazas for goods transport until further direction.
MLA Local Development Program: Under MLALAD program, a one-time special exception to use the MLALAD funds was given to legislators for the purchase of medical equipment and materials for COVID-19 during the year 2020-21.
Analysing the impact on the economy of the state: On April 13, the government constituted an Expert Committee and a Cabinet Sub-Committee to analyse the implications of COVID-19 on the economy of the state. These committees will also suggest measures to revive the economy of the state.
Orders relating to Mumbai city
On April 8, the city administration made it compulsory for all people to wear masks in public places.
On April 10, the Commissioner of Police, Greater Mumbai issued an order prohibiting any kind of fake or distorted information on all social media and messaging applications. The order is valid until April 24.
For more information on the spread of COVID-19 and the central and state government response to the pandemic, please see here.
Last week, the Power Finance Corporation reported that state-owned power distribution companies across the country made financial losses amounting to Rs 68,832 crore in 2022-23. This is four times higher than the losses witnessed in 2021-22, and roughly equivalent to the annual budget of a state like Uttarakhand. This blog examines some of the causes and implications of such losses.
Overview of financial losses
For several years now, electricity distribution companies (discoms), which are mostly state-owned, have witnessed steep financial losses. Between 2017-18 and 2022-23, losses accumulated to over three lakh crore rupees. In 2021-22, discom witnessed substantial reduction in their losses, primarily because states released 1.54 lakh rupees in subsidies to clear pending dues. State governments provide discoms with subsidies, so that domestic and agricultural consumers receive affordable power. These payments are typically delayed which creates cash flow constraints, and leads to an accumulation of debt. In addition, costs incurred by discoms in 2021-22 remained unchanged.
Note: Data from 2020-21 onwards does not include Odisha, and Dadra & Nagar Haveli and Daman and Diu since their distribution function was privatised in 2020-21. Data for Ladakh is available from 2021-22 onwards. Data for Jammu and Kashmir is not available. The Delhi Municipal Council Distribution Utility has been included from 2020-21 onwards.
Sources: Power Finance Corporation reports for various years; PRS.
As of 2022-23, losses have increased again to reach Rs 68,832 crore. This increase has been driven by rising costs. At a per unit level, the cost of supplying one kilowatt of electricity rose from 7.6 rupees in 2021-22, to 8.6 rupees in 2022-23 (See Table 1).
Table 1: Financial details of state-owned power distribution companies
|
Details |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
|
Average cost of supplying power (ACS) |
7.4 |
7.7 |
7.6 |
8.6 |
|
Average revenue realised (ARR) |
6.8 |
7.1 |
7.3 |
7.8 |
|
Per unit loss (ACS-ARR) |
0.6 |
0.6 |
0.3 |
0.7 |
|
Total losses (in Rs crore) |
-60,231 |
-76,899 |
-16,579 |
-68,832 |
Note: Data from 2020-21 onwards does not include Odisha, and Dadra & Nagar Haveli and Daman and Diu since their distribution function was privatised in 2020-21. Data for Ladakh is available from 2021-22 onwards. Data for Jammu and Kashmir is not available. The Delhi Municipal Council Distribution Utility has been included from 2020-21 onwards.
Sources: Power Finance Corporation reports for various years; PRS.
Purchase of electricity from generation companies (gencos) forms about 70% of a discom’s total costs, and coal is the primary source for generating electricity. The following chain of events took place in 2022-23: (i) consumer demand for electricity rose by 10% over the previous year, as compared to a 6% year-on-year increase in the past 10 years, (ii) coal had to be imported to meet the increased demand, and (iii) global coal prices were elevated.
Coal imported at elevated prices to keep up with rising electricity demand
In 2022-23, demand for electricity increased by 10% over 2021-22. Between 2008-09 and 2018-19, demand increased at an annual growth rate (CAGR) of 6%. Electricity demand grew as the economy grew (at 7%), and largely came from domestic and agricultural consumers. These consumer categories account for 54% of the total electricity sales, and their demand rose by 7%.
Sources: Central Electricity Regulatory Commission; PRS.
Electricity cannot be stored at scale, which means that generation must be scheduled depending on anticipated demand. The Central Electricity Authority anticipates annual demand for each year. It estimated that demand in 2022-23 would be at 1,505 billion units. However, the actual demand was higher than anticipated in the first few months of 2022-23 (See Figure 3).
To meet this demand, electricity generation had to be ramped up. Coal stocks had already depleted from 29 million tonnes in June 2021 to eight million tonnes in September 2021, on account of high demand in 2021-22. To ensure uninterrupted supply of power, the Ministry of Power directed gencos to import coal. The Ministry noted that without imports, widespread power cuts and blackouts would have occurred.
Sources: Load Generation Balance Report 2022 and 2023, Central Electricity Authority; PRS.
Coal imports rose by about 27 million tonnes in 2022-23. While this constituted only 5% of the overall coal used in the sector, the price at which it was imported significantly impacted the sector. In 2021-22, India imported coal at an average price of Rs 8,300 per tonne. This rose to Rs 12,500 per tonne in 2022-23, a 51% increase. Coal was primarily imported from Indonesia, and prices shot up due to the Russia-Ukraine war, and demand surge by countries like India and China.
Sources: Ministry of Power; Ministry of Statistics and Programme Implementation; PRS.
Coal import situation going forward
In January 2023, the Ministry of Power advised gencos to import 6% of the required coal, to ensure sufficient stock until September 2023. It noted that due to floods and variable rainfall in various parts of the country, hydro generation capacity reduced by about 14%. This put additional burden on coal based thermal generation in 2023-24. Following this, in October 2023, the Ministry directed all gencos to continue using at least 6% imported coal until March 2024.
Sources: Ministry of Coal; PRS.
Structural issues in the power sector and its impact on state finances
Discoms witness persistent financial losses due to certain structural issues. Their costs are typically high because of old contracts with generation companies (gencos). Power purchase costs in these contracts do not account for production efficiencies over the years, and costs remain unchanged. Tariffs are only revised every few years, to ensure that consumers are protected from supply chain shocks. As a result, costs are carried forward for a few years. In addition, discoms sell electricity to certain consumers such as agricultural and residential consumers, below cost. This is supposed to primarily be recovered through subsidy grants provided by state governments. However, states often delay subsidy payments leading to cash flow issues, and accumulation of debt. In addition, tariff recovery from the power sold is not optimal.
Losses reported in the generation sector have also increased. In 2022-23, state-owned gencos reported losses worth Rs 7,175 crore, as compared to the Rs 4,245 crore in 2021-22. Rajasthan accounted for 87% of these, at Rs 6,278 crore. Note that under the Late Payment Surcharge Rules, 2022, discoms are required to make upfront payments to gencos.
Risk to state finances
Persistent financial losses, high debt and guarantees extended by states continue to pose a risk to state finances. These are contingent liabilities for state governments, i.e., in the event a discom is unable to repay its debt, the state would have to take it over.
Several such schemes have been introduced in the past to bail discoms out (See Table 2). As of 2022-23, discoms have an outstanding debt worth Rs 6.61 lakh crore, 2.4% of the national GDP. Debt is significantly high in states such as Tamil Nadu (6% of GSDP), Rajasthan (6% of GSDP), and Uttar Pradesh (3% of GSDP). Previous Finance Commissions have recognised that strengthening discom finances is key in minimising the risk to state finances.
Table 2: Key government schemes for the turnaround of the distribution sector over the years
|
Year |
Scheme |
Details |
|
2002 |
Bailout Package |
States take over the debt of state electricity boards worth Rs 35,000 crore, 50% waiver of interest payable by state electricity boards to central PSUs |
|
2012 |
Financial Restructuring Package |
States take over 50% of the outstanding short-term liabilities worth Rs 56,908 crore |
|
2015 |
Ujwal Discom Assurance Yojana (UDAY) |
States take over 75% of the debt of discoms worth Rs 2.3 lakh crore and also provide grants for any future losses |
|
2020 |
Liquidity Infusion Scheme |
Discoms get loans worth Rs 1.35 lakh crore from Power Finance Corporation and REC Limited to settle outstanding dues of generators, state governments provide guarantee |
|
2022 |
Revamped Distribution Sector Scheme |
Central government to provide result-linked financial assistance worth Rs 97,631 crore for strengthening of supply infrastructure |
Sources: NITI Aayog, Press Releases of the Ministry of Power; PRS.
For more details on the impact of discom finances on state finances, see here. For more details on structural issues in the power distribution sector, see here.
ANNEXURE
Table 3: Cost and revenue structure of discoms on energy sold basis (in Rs per kw)
|
Details |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
|
Average cost of supplying power (ACS) |
7.4 |
7.7 |
7.6 |
8.6 |
|
of which |
||||
|
Cost of procuring power |
5.8 |
5.9 |
5.8 |
6.6 |
|
Average revenue realised (ARR) |
6.8 |
7.1 |
7.3 |
7.8 |
|
of which |
||||
|
Revenue from sale of power |
5.0 |
4.9 |
5.1 |
5.5 |
|
Tariff subsidy |
1.3 |
1.4 |
1.4 |
1.5 |
|
Regulatory income and revenue grant under UDAY |
0.3 |
0.1 |
0.0 |
0.2 |
|
Per unit loss |
0.6 |
0.6 |
0.3 |
0.7 |
|
Total financial losses |
-60,231 |
-76,899 |
-16,579 |
-68,832 |
Sources: Power Finance Corporation reports for various years; PRS.
Table 4: State-wise profit/loss of power distribution companies (in Rs crore)
|
State/UT |
2017-18 |
2018-19 |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
|
Andaman and Nicobar Islands |
-605 |
-645 |
-678 |
-757 |
-86 |
-76 |
|
Andhra Pradesh |
-546 |
-16,831 |
1,103 |
-6,894 |
-2,595 |
1,211 |
|
Arunachal Pradesh |
-429 |
-420 |
NA |
NA |
NA |
NA |
|
Assam |
-259 |
311 |
1,141 |
-107 |
357 |
-800 |
|
Bihar |
-1,872 |
-1,845 |
-2,913 |
-2,966 |
-2,546 |
-10 |
|
Chandigarh |
321 |
131 |
59 |
79 |
-101 |
NA |
|
Chhattisgarh |
-739 |
-814 |
-571 |
-713 |
-807 |
-1,015 |
|
Dadra & Nagar Haveli and Daman & Diu |
312 |
-149 |
-125 |
NA |
NA |
NA |
|
Delhi |
NA |
NA |
NA |
98 |
57 |
-141 |
|
Goa |
26 |
-121 |
-276 |
78 |
117 |
69 |
|
Gujarat |
426 |
184 |
314 |
429 |
371 |
147 |
|
Haryana |
412 |
281 |
331 |
637 |
849 |
975 |
|
Himachal Pradesh |
-44 |
132 |
43 |
-153 |
-141 |
-1,340 |
|
Jharkhand |
-212 |
-730 |
-1,111 |
-2,556 |
-1,721 |
-3,545 |
|
Karnataka |
-2,439 |
-4,889 |
-2,501 |
-5,382 |
4,719 |
-2,414 |
|
Kerala |
-784 |
-135 |
-270 |
-483 |
98 |
-1,022 |
|
Ladakh |
NA |
NA |
NA |
NA |
-11 |
-57 |
|
Lakshadweep |
-98 |
-120 |
-115 |
-117 |
NA |
NA |
|
Madhya Pradesh |
-5,802 |
-9,713 |
-5,034 |
-9,884 |
-2,354 |
1,842 |
|
Maharashtra |
-3,927 |
2,549 |
-5,011 |
-7,129 |
-1,147 |
-19,846 |
|
Manipur |
-8 |
-42 |
-15 |
-15 |
-22 |
-146 |
|
Meghalaya |
-287 |
-202 |
-443 |
-101 |
-157 |
-193 |
|
Mizoram |
87 |
-260 |
-291 |
-115 |
-59 |
-158 |
|
Nagaland |
-62 |
-94 |
-477 |
-17 |
24 |
33 |
|
Puducherry |
5 |
-39 |
-306 |
-23 |
84 |
-131 |
|
Punjab |
-2,760 |
363 |
-975 |
49 |
1,680 |
-1,375 |
|
Rajasthan |
-11,314 |
-12,524 |
-12,277 |
-5,994 |
2,374 |
-2,024 |
|
Sikkim |
-29 |
-3 |
-179 |
-34 |
NA |
71 |
|
Tamil Nadu |
-12,541 |
-17,186 |
-16,528 |
-13,066 |
-9,130 |
-9,192 |
|
Telangana |
-6,697 |
-9,525 |
-6,966 |
-6,686 |
-831 |
-11,103 |
|
Tripura |
28 |
38 |
-104 |
-4 |
-127 |
-193 |
|
Uttar Pradesh |
-5,269 |
-5,902 |
-3,866 |
-10,660 |
-6,498 |
-15,512 |
|
Uttarakhand |
-229 |
-808 |
-323 |
-152 |
-21 |
-1,224 |
|
West Bengal |
-871 |
-1,171 |
-1,867 |
-4,261 |
1,045 |
-1,663 |
|
State Sector |
-56,206 |
-80,179 |
-60,231 |
-76,899 |
-16,579 |
-68,832 |
|
Dadra & Nagar Haveli and Daman & Diu |
NA |
NA |
NA |
242 |
148 |
104 |
|
Delhi |
109 |
657 |
-975 |
1,876 |
521 |
-76 |
|
Gujarat |
574 |
307 |
612 |
655 |
522 |
627 |
|
Odisha |
NA |
NA |
-842 |
-853 |
940 |
746 |
|
Maharashtra |
NA |
590 |
1,696 |
-375 |
360 |
42 |
|
Uttar Pradesh |
182 |
126 |
172 |
333 |
256 |
212 |
|
West Bengal |
658 |
377 |
379 |
398 |
66 |
-12 |
|
Private Sector |
1,523 |
2,057 |
1,042 |
2,276 |
2,813 |
1,643 |
|
All-India |
-54,683 |
-78,122 |
-59,189 |
-77,896 |
-13,766 |
-67,189 |
Note: Minus sign (-) indicates loss; Dadra & Nagar Haveli and Daman & Diu discom was privatised on April 1, 2022; New Delhi Municipal Council Distribution utility has been added from 2020-21 onwards.
Sources: Power Finance Corporation reports for various years; PRS.
