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Editorial | January 2016

The Sun also rises for our Discoms

Leaders are women or men in positions of power û power over collectives of people, small or large, power to plan policies, and empowered to take decisions impacting the people. I classify all such leaders into two broad groups, one who balances populism and short-termism with the longer term outcomes, and focuses on creating sustainable institutions for the future even as they serve the immediate interests of their constituencies; and the other group of leaders are those who mindlessly pursue short term interests, oblivious of long term good of the people, and create meaningless and unsustainable assets only to be run down in a few years, throw good money after bad money only to win votes and to sustain their own positions. These leaders, if we can call them so, lack the ability to envision things, and will definitely leave behind an eminently forgettable legacy.

Discoms, short name for Power Distribution Companies (created after splitting generation and distribution of power) are exemplary results of this questionable category of public leadership in our country. If there were ever any symbols of unsustainable institutions, these were the ones! Consider these numbers - which, by the way, came about after one or two rounds of so called ´restructuring´ and a few instances of much touted privatisation: Total debt of over Rs 5 lakh crore, and a monumental matching figure of Rs 3.8 lakh crore of accumulated losses! This massive debt is a sum equivalent to two-and-a-half times our defence budget, and enough to wipe out India´s fiscal deficit. The decaying health of our Discoms is also manifest in their inability to pay their generator-vendors - Rs 4,000 crore in 2014. In general, our power plants are operating at their lowest level of 59 per cent of their capacity as Discoms do not have the money to buy power.

Although eight states embraced Financial Reconstruction Package introduced in 2012, it failed in ultimate analysis, because the scheme had no deterrents to non-compliance with loss-reduction targets. So, obviously, something new, something different was necessary. We needed a bold strategic plan with built-in inducements to ensure rigorous implementation. This is where UDAY comes in. The scheme - Ujwal Discom Assurance Yojana - is intended to empower the utilities over next three years to reform themselves into viable entities. CRISIL says in its report that UDAY makes the states formally accountable for efficiency improvement and tariff increases in line with costs. ´It is thus a more comprehensive solution compared with FRP.´ In the interest of progress of our nation, let us hope that this rings true in 2016. Let us also hope that we have more strategic leaders who can balance our immediate political objectives with long term good of the country.

So, here´s wishing our readers a more ´power´ful New Year in 2016! Enjoy reading. Please send us your feedback at Sumit@ASAPPmedia.com Sumit Banerjee Chairman, Editorial Advisory Board

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