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Plan panel reforms mean costlier electricity, water

delhi Updated: May 28, 2011 23:31 IST
Chetan Chauhan

In the Planning Commission’s new reform agenda consumers may have to pay more for electricity and water, state government may get funds on conditional basis and there would be a new regulatory framework for underground water management on public trust doctrine.

In a note prepared for chief ministers, the plan panel has said that there will be lesser availability of funds for subsidies and development works except health and education. “The Gross Budgetary Support (GDS) for other sectors will go down,” the panel said in the note.

For this to happen, the plan panel has proposed to grant loans to the state governments to execute Centrally Sponsored Schemes (CSS), which would be subsequently converted to grants on achievement of pre-specified outcome of targets.

Already, the model is in use for Accelerated Power Reforms Development Programme (APRDP), which the commission officials say has done well after introduction of the model.

This has been proposed because of lack of ownership of the CCS by the state governments and poor outcomes. The commission has also said that involvement of civil society in formulation of schemes should become a norm. Further, the plan panel has constituted a committee under BK Chaturvedi, member in-charge of infrastructure, to recommend the schemes that can be scrapped.

But the biggest change the plan panel has suggested is in power and water sector, essential for India to achieve over 9% GDP growth. “Prices of electricity are not sufficiently flexible and regulators are being restrained from allowing periodic price increases,” the note says. The panel has also suggested incentives to make open access in energy price fixation a reality.

Increasing electricity generation will not be easy as coal production is a major constraint partly due to weak performance of Coal India and partly because of environment constraints. Coal imports are expected to increase from 80 million tones to 250 million tones by end of 12th plan.

To ensure that everyone gets equal share of water, the commission will be pushing the Central government to promulgate a new groundwater law and a new Water Management Law on the lines of the one in European Union. The commission wants water recycling in urban and industrial areas to be made mandatory.