India’s power sector on revival mode, but needs bolder reforms to remain viable

The demand for power in India fell more than 30 per cent from peak levels during the months of the COVID-induced lockdown. Though still lower than the pre-COVID levels of February, the demand for power has shown a recovery with the unlocking of the economy, a healthy sign.

However, according to a recent report by Brickwork Ratings, bolder reforms and faster implementation in the power sector are imminent to bring about a meaningful change in the sector’s viability.

The report observes that on the distribution side, the struggling sector received some respite, with an increase in electricity demand recently. However, the challenges faced by the sector are far from over. The Brickwork report points out that of the total liquidity package of Rs 90,000 crore announced for discoms (electricity distribution companies), more than Rs 70,000 crore has been sanctioned and Rs 25,000 crore has been disbursed.

But the payables of these discoms increasing by the day is a growing concern and the amount released by the government until now is not sufficient. The benefit is also yet to be passed on to generators.

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