State govt receives Rs 27.25 bn incentive for power sector reforms

According to official sources, the state government has received a total of Rs 27.25 billion as financial incentives for the power sector reforms in the fiscal years 2021-22 and 2022-23. The Department of Expenditure under the Ministry of Finance released an amount of Rs 664.13 billion to 12 states. This funding is aimed at encouraging and supporting states in improving the efficiency and performance of their power sectors. The financial incentive initiative was introduced by the central government in the Union Budget 2021-22, with the condition that specific power sector reforms must be implemented by the states to qualify for these incentives. As per an official statement, the states are eligible for an additional borrowing space of up to 0.5 per cent of their Gross State Domestic Product (GSDP) annually from 2021-22 to 2024-25. Several states, including Odisha, have submitted reports to the Ministry of Power detailing the reforms they have undertaken and the accomplishments achieved across various parameters. Based on the recommendations of the Ministry of Power, the Ministry of Finance has granted approval for the reforms undertaken by 12 state governments in the years 2021-22 and 2022-23. To avail this facility, the states must comply with a set of mandatory reforms and meet predetermined performance benchmarks. These include ensuring transparency in financial reporting within the power sector, timely submission of financial and energy accounts, and adherence to legal and regulatory requirements through timely audits and compliance.