Restructuring the Indian Power Sector: Some Issues

The power sector is undergoing a structural change in many parts of the world, involving dismantling of public monopolies. In India, power policy has changed since 1991, but the progress has been slow and uneven. The response of the private sector has been disappointing, mainly because of the financial weakness of the State Electricity Boards. Public investment on power development should not be scaled down. Corporatisation of SEBs will not bring about any improvement without tariff rationalisation and a change in the style of their functioning. Large-scale privatisation is neither feasible nor desirable. The credibility of the regulatory authorities is important, but the state governments must play a supportive role. It is unrealistic to expect the emergence of an electricity market in India in the near future. Serious thought should be given to the creation of a new legal framework for future power development in India.