Finance panel wants to stop power, water & rail subsidies

Power, water and other public utilities will be many times costlier if the government accepts the 14th Finance Commission’s recommendations in toto.

 The commission, whose suggestions were made public on Tuesday, had vociferously demanded that all public utilities be adequately charged and sought for an end to free power or water supply to consumers.

The commission also questioned the rationale behind subsidy on rail fare.

According to the commission, most of the woes in the power and water sectors including huge losses are due to lack of metering for electricity. Hence, it recommended 100 per cent metering to be achieved for power and water supplies.

“We recommend that 100 per cent metering be achieved in a time bound manner for all consumers as already prescribed statutorily,” the commission said in its report. In a seemingly terse tone, it said that no water supply should be made to consumers without metering from 2017.

 “All existing individual connections of water in urban and rural areas should be metered by March 2017 and the cost should be borne by the consumers.

The recommendations have come barely a day before Delhi Chief Minister Arvind Kejriwal announced a 50 per cent cut in power tariff and free water to Delhiites.

The commission said that the from a purely economic perspective, the price of any commodity or service should cover long term marginal cost of its production.

The commission has also expressed concerns over state governments not  hiking power tariff for years despite a strain on their finances.

On transport sector too, the commission has advocated for an end to freebees and subsidy.

 “The tariff structure in the Railways is characterised by very low passenger fares and high freight charges. Indian passenger tariffs are one-fourth of those in China, one-ninth of those in Russia and nearly one-tenth of tariffs in Japan,” the commission said while asking the government to start rationalisation of fares and freight structures.