‘Power subsidy withdrawal to impact Maharashtra’s growth’

  • Dharmendra Jore, Hindustan Times, Mumbai
  • Updated: Dec 13, 2014 19:51 IST

The state power consumers’ federation has criticised the Maharashtra government’s decision of withdrawing the 20% subsidy — Rs 706 crore a month — for industrial and domestic electricity consumers.

It said the move was detrimental to the state’s growth as the tariff will now increase significantly compared to neighbouring states.

Starting this month, consumers of the state electricity distribution company Mahavitaran, with the exception of farmers, will be charged 20% more in their monthly bills.

The Congress-NCP government had announced the subsidy for farmers, industrial and residential consumers whose monthly consumption was limited to 300 units. Consumers in the city, barring those in the eastern suburbs of Kanjurmarg to Mulund, did not get the benefit. The BJP government has cited its poor financial condition for the decision and has declared a 40% cut on development grants till the next budget is presented.

“We expected the state government to enforce measures to check corruption in the power companies, huge distribution losses and inefficiency before withdrawing the subsidy,” said Pratap Hogade, convener of umbrella coordination committee of residential and industrial power consumers.

The decision is likely to impact the state’s overall growth and hurt investment prospects because the trend of moving to other states, where power is cheaper for industrial users, will continue. The federation has planned an agitation during the winter session of the state legislature in Nagpur.

But chief minister Devendra Fadnavis said the subsidy wasn’t the only solution to reduce tariff. He said the companies in the state could save more if they followed reforms such as reducing production costs, increasing production of renewable energy and adopting a new accounting model that would help them save on the tax on profits. “This will bring the tariff down by at least Re1 a unit,” he told HT.

Fadnavis justified the new accounting system for the companies because they were paying higher taxes in view of high profits reported. The money saved through the new accounting system could be used for reducing the cost of electricity, he said.

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