Centre to provide financial incentives worth US$ 17.48 billion (Rs. 1,43,332 crore) in FY24 to states for power sector reforms
- IBEF
- June 30, 2023
The central government announced financial incentives to states on June 27, 2023, in the form of increased borrowing permissions for power sector reforms. The aim of the move, according to a statement from the finance ministry, is to "promote and support the states in pursuing reforms to boost the efficiency and performance of the power sector.” For the fiscal year 2023-24, the government has set aside US$ 17.48 billion (Rs. 1,43,332 crore) as a financial incentive. Previously, a sum of US$ 8.10 billion (Rs. 66,413 crore) was granted for the reforms carried out in 2021-22 and 2022-23.
Ms. Nirmala Sitharaman, the finance minister, made the announcement in the Union Budget 2021-22 for this initiative. A further borrowing space of up to 0.5% of the Gross State Domestic Product (GSDP) is made available to the states under this initiative on an annual basis for four years from 2021 to 2024.
The effort has encouraged state governments to initiate the reform process, and several states have stepped up and provided specifics of the reforms carried out and the achievements of various achievements of the ministry of power.
The main aim of providing financial incentives is to boost the sector's operational and economic efficiency and encourage a steady rise in paid power usage. State governments must implement a number of necessary reforms and fulfil predetermined performance goals to qualify for the incentives.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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