Just as one of the most bitter
fought elections are about to conclude in the eastern and politically important
state of Bihar, the Central government of Prime Minister Narendra Modi is all
set to unveil a set of reforms which if implemented can really electrify the
investor confidence.
Going by what Finance
Minister Arun Jaitley has said : the Modi Government is going ahead with taking up reforms in the debt –ridden or
almost bankrupt state-owned power utilities which provide the last mile
connectivity in the electricity supply chain.
The Union Cabinet is expected
to approve a recast of huge debt of these utilities , amounting to over USD
65-70 billion with a rider that they will have to raise the user charges and
different political parties ruling in different states would not indulge in “bad economics”. As long as the electioneering does not end in
Bihar, this kind of reforms where the user charges might have to be revised
would have damaged the prospects of the PM Modi’s BJP. His prestige is at stake in Bihar elections.
We have a situation in India
where there is no shortage of generation, but the discoms are not able to lift
the power and sell as they are broke. In the process, they have adversely
impacted the balance sheets of the banks by adding to their stressed assets. The power sector is the most troublesome area for the banks' assets.
FM Jaitley said: “ In the
next couple of days, we are likely to announce some major policy decisions in
that regard to take the sector out of stress.The big problem area for us is the
power sector. I think that is an infrastructure issue which we are going to be
addressing literally in the next couple of days, if not in the next couple of
hours itself. We have almost finalised an approach in that direction.
