Power play, again

Prime Minister Manmohan Singh has, time and again, argued against such profligacy. Indeed, power reforms figure fairly high in the PM8217;s reform agenda. If the country has a shortage of power, it makes little sense to create conditions for people to waste it. Moreover, the power sector needs to invest in power generation, transmission and distribution. The investment needs of the sector cannot be fulfilled if state electricity boards are run to the ground in order to fulfil the political agenda of the party in power.

Amarinder Singh will, to his credit, provide an on-budget subsidy to ensure that the Punjab State Electricity Board does not suffer losses. He is attempting to ride on the back of higher revenue collections thanks to VAT. But this may prove dangerous in the long term because it has often been seen that in the first year of VAT revenues go up since it takes time for refunds to be made. Once the refunds start, revenues could fall, and by then it may be too late to withdraw the free power scheme. In the meanwhile, much damage would have been done, with the greater use of power 8212; encouraged by such bonanzas 8212; creating more power shortages. This could, in turn, render Punjab unattractive to the revenue yielding manufacturing sector. In other words, the Captain could well end up killing the goose that lays the golden egg.