The AP Government’s all-out efforts to introduce reforms in the power distribution sector are solely intended to get clearance for making an additional Rs. 20,000 Cr loans. This would be possible only when the smart meters are fixed on agriculture connections to make sure that electricity distribution companies get their revenues without fail. The Central Government has put a condition for mandatorily implementing power reforms in order to give relaxations under the Fiscal Responsibility and Budget Management Act to go for higher borrowings.

As of now, Andhra Pradesh like all other states can borrow just up to 3 per cent of its Gross State Domestic Product as per the FRBM Act. But in view of the Covid-induced financial stress, the Centre has agreed to increase borrowings limit by another 0.5 per cent. At the same time, the Centre put some conditions for the State if they want the borrowings limit to be increased from 3.5 per cent to 5 per cent. These conditions included power distribution reforms, universalisation of ration cards, urban local bodies revenues strengthening and better Ease of Doing Business performance.

Of these conditions, the power reforms are loaded with political consequences. Many states including Tamil Nadu objected to the conditions. But Andhra Pradesh came forward with a Direct Cash Transfer scheme to credit monthly bills amounts into the farmers’ accounts. This way, the Discoms can directly redeem their bills from the farmers’ dedicated accounts.

However, the question remains whether the Government would sincerely implement this once its purpose was served. No doubt, the farmers would lose their right to free power scheme once anything goes amiss.