Team News Riveting
Madhya Pradesh has taken the lead in undertaking power sector reforms stipulated by the Department of Expenditure, Ministry of Finance, making it eligible for mobilising additional financial resources of Rs 1423 crore.
As part of the reforms, the State has started Direct Benefit Transfer (DBT) of electricity subsidy to farmers in one district of the state with effect from December, 2020. Thus, the State has successfully implemented one out of the three stipulated reforms in the power sector.
Successful implementation of the reform has made the State eligible to mobilise additional financial resources equivalent to 0.15 per cent of its Gross State Domestic Product (GSDP). Accordingly, the Department of Expenditure has granted permission to the State to mobilise additional financial resources of Rs 1,423 crore through Open Market Borrowings. This has provided the much needed additional financial resources to the State to fight COVID-19 pandemic.
Power Sector reforms stipulated by the Ministry of Finance aim at creating 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 issued by the Department of Expenditure, the States undertaking reforms in the 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 3 reforms in the sector:
Madhya Pradesh has framed a DBT Scheme for agricultural consumers in the State. The Scheme has been implemented in Vidisha District of the State, where electricity is supplied through the MP Madhya Kshetra Vidyut Vitaran Co. Limited with effect from December, 2020. Under the Scheme an amount of Rs 32.07 crore was transferred to the bank accounts of 60,081 beneficiaries in the month of December, 2020.
Parallelly, the State has also initiated a process to implement the DBT scheme in Jhabua and Seoni districts as well. Based on the learnings from implementation of the Scheme in 3 districts in Phase-I, the Scheme will be rolled out in the entire State in the financial year 2021-22.
In view of the resource requirement to meet the challenges posed by the COVID-19 pandemic, the Government of India had on 17th May, 2020 enhanced the borrowing limit of the States by 2 percent of their GSDP. Half of this special dispensation was linked to undertaking citizen centric reforms by the States.
Till now, 14 States have carried out at least one of the four stipulated reforms and have been granted reform linked borrowing permissions. Out of these, 11 States have implemented the One Nation One Ration Card System, 8 States have done ease of doing business reforms, 4 States have done local body reforms and Madhya Pradesh has implemented power sector reforms. Total reform linked additional borrowing permission issued so far to the States stands at Rs 62,762 crore.
