Pressing the right reform buttons

The challenge to improve India’s power sector hasn’t been so daunting in a long while. While capacity addition is happening at a furious pace of 8,000-10,000 megawatts per annum, the ability of the state-owned distribution utilities to pay for these bills is in serious doubt. Key lenders to the utilities, Power Finance Corp. and Rural Electrification Corp., stopped lending a few months ago to resume only recently, with stiff conditions that aim to improve their viability. This includes tariff hikes that enable the utility to charge consumers what it costs to serve them.

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