Bhubaneswar: The Union government on Tuesday announced financial incentives in the form of additional borrowing permissions to states to accelerate power sector reforms.
The Department of Expenditure, Ministry of Finance said the move aims to “encourage and support the states in undertaking reforms to enhance the efficiency and performance of the power sector.”
Based on the recommendations of the Ministry of Power, the Ministry of Finance has granted permission for reforms undertaken in 2021-22 and 2022-23 to 12 states, including Odisha. Over the last two financial years, they have been allowed to raise financial resources of Rs 66,413 crore through additional borrowing permissions, an official release said on Wednesday.
Odisha government has been allowed to raise financial resources of Rs 2,725 crore through additional borrowing permissions to undertake the stipulated reforms in the power sector.
This additional borrowing space is contingent on states implementing specific power sector reforms.
The initiative was announced by the Union Finance Minister in Union Budget 2021-22. Under this initiative, an additional borrowing space of up to 0.5 percent 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 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.
In the financial year 2023-24, states can continue to avail themselves of the facility of additional borrowing linked to power sector reforms. An amount of Rs. 1,43,332 crore will be available as an incentive to states for undertaking these reforms in 2023-24. 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.
