'Undertake reforms that lower power tariff for poor'

After sweeping changes undertaken by the Prime Minister Narendra Modi government in the power sector, the Economic Survey has pointed towards some more changes, which can lower power tariff for poor.

It has suggested bringing Indian electricity tariffs on the lines of Bangladesh, Sri Lnka, South Korea, Vietnam and Brazil, which have reflected in higher ratio of tariffs charged to the rich, relative to poor.

It says, the power regulator in India, while deciding on tariff schedules and cross subsidisation rate for different category, has to undertake a broad welfare analysis.

The survey asks: “Given the differential response of consumers to prices, and given that governments may wish to provide greater relief to the poorest sections, what should be the best structure of tariffs, while also ensuring what power supply costs are recovered?”

It notes that the power tariff rates charged by the better-off are subsidised to the extent of 32 per cent, and the poor, 49 per cent in case of two states of Delhi and Tamil Nadu for which the data was available with the Centre.

The survey says that given the magnitude of relative power consumption of the better-off, the subsidy to them is substantial. The survey also proposes that the power tariff should be simplified to two or three slabs to improve transparency and efficiency of recovery. At present, some states have as many as 40 classes of consumers depending on consumption and end-use.

Economic Survey : Given the differential response of consumers to prices, and given that governments may wish to provide greater relief to the poorest sections, what should be the best structure of tariffs