New challenges for him

One cannot but feel sympathy for Power Minister Piyush Goyal. He is highly intelligent, articulate and efficient. Unfortunately for him he has been given charge of the impossible portfolio of power.

State governments have sole responsibility for all generation within their States except plants owned by the Centre or set up to supply other States, intra-State transmission, State load dispatch centres, and distribution and supply to customers and billing them. States appoint the regulatory commissions in the States and the Centre appoints the central electricity commission and the appellate tribunal.

The State government is thus the final contact point that deals with all customers.

Some functions are given to a statutory regulator. The State government appoints the selection committees that select regulators, thus ensuring they are compliant with State government interests and preferences. The bane of electricity distribution in India is our erratic[i'ra-tik(unstable,अस्थिर)] monsoon that makes.India is said to be the largest user of ground water for agriculture.

Most distribution of electricity is by State-owned electricity boards that have run up huge losses. These have been twice paid off by loans from the Centre but the condition that the States improve performance has not been fulfilled.
One way out is to ask nationalised banks not to lend to SEBs in deficit. This will be politically impossible.

The Centre could lay down strict standards for pumpsets and the States might ensure they are followed. By segregating[se-gru,geyt(separate,अलग)] agricultural feeders the State can ration out the power to agriculture and minimise theft. Gujarat has done this effectively.

Proximity to the voter makes free power to agriculture inevitable[i'ne-vi-tu-bul(necessary,आवश्यक)]. Either the SEBs could be given out to private parties on contract management, or they could be privatised, with strong audit and statutory regulation to ensure that the customer is not exploited. A private contract manager or owner will not permit the inefficiency and collusive[ku'loo-siv(conspiracy,षड्यंत्र)] theft that are common today. Cross-subsidies must be abolished[u'bó-lish(do away with,बहिष्कार)]. This could be incorporated in the to-be amended Electricity Act 2003 so that regulators have no option but to disallow them. If farmers have to get free power, that is a political decision by the State government. It should bear the costs.

There is little the Centre can do to improve performance of distribution companies within the present Constitution.It could ban inefficient pumpsets. Most importantly the Centre can change the relative price structure of agricultural products. Paddy (rice) is no longer a growing item in household budgets and could be discouraged in household use by changing minimum support prices. State governments could be helped to introduce cash transfer schemes so that identified beneficiary households get the subsidy in their bank accounts for the electricity they buy according to the meter.

Without determined action, Goyal’s initiative will meet the same fate as similar earlier ones

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