In a first, states release over 100% of subsidies to discoms

FOR THE FIRST time, the state governments disbursed more than 100% of the annual subsidy dues to power distribution companies (discoms) in the fiscal year 2021-22, in a sign that the Centre's coercive tactics, aimed at enforcing discipline among few states prone to populism, are yielding results.

- MANISH GUPTA

Non-payment or delays in release of subsidies to the discoms is seen to be the starting point of the vicious cycle of payment defaults in the energy value chain.

As per Power Finance Corporation's (PFC) latest integrated rating report, the total subisidy booked for the fiscal 2021-22, the latest year for which data is available, was ₹1.78 trillion, and the discoms received ₹1.83 trillion, meaning disbursement of more than 102% for the year. Tariff subsidy - subsidised tariffs offered to certain end-customers like farmers and low-income groups - booked by the discoms stood at ₹1.43 trillion in FY22, while ₹1.56 trillion was disbursed (109% of booked amount). "Improvement in subsidy disbursal was one of the biggest highlights for FY22," PFC said in the report.

"I have never seen such high levels of subsidy disbursement by states in my four decades of association with this industry," said Association of Power Producers (APP) director general Ashok Khurana. He attributed the development to "the series of measures put in by the central government to enforce payment discipline."