Rs 1.4 lakh cr incentive available in 2023-24 for States' power sector reforms

New Delhi [India], June 28 : An amount worth Rs 1,43,332 crore will be available as an incentive to states for undertaking power sector reforms in 2023-24, the Union Ministry of Finance said Wednesday.

Like the previous two years, States this year too can continue to avail themselves of the facility of additional borrowing linked to power sector reforms.

"States that were unable to complete the reform process in 2021-22 and 2022-23 may also benefit from the additional borrowing earmarked for 2023-24 if they carry out the reforms in the current financial year," an official release from the Ministry of Finance said Wednesday.

The additional borrowing window for states was announced by the Union Finance Minister Nirmala Sitharaman in Union Budget 2021-22. Under the initiative, an additional borrowing space of up to 0.5 per cent of the Gross State Domestic Product (GSDP) is available to the States annually for a four-year period from 2021-22 to 2024-25.

This additional financial window is dependent on the implementation of "specific reforms" in the power sector by the States.

"The initiative has spurred State Governments to initiate the reform process, and several States have come forward and submitted details of the reforms undertaken and achievements of various parameters to the Ministry of Power," the finance ministry release said.

"Over the last two financial years, they have been allowed to raise financial resources of Rs. 66,413 crores through additional borrowing permissions."

To be eligible for the incentives, State governments must undertake a set of mandatory reforms and meet stipulated performance benchmarks. They include transparency in the reporting of financial affairs, timely audit, and compliance with legal and regulatory requirements, among others.

Furthermore, the States are eligible for bonus marks for the privatisation of power distribution companies.