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Indian Economy / Industry Sector

Power Sector Reforms in India


    As part of power sector reforms in India, an Electricity Act was passed by the Government of India during the year 2003. Many states have started unbundling their State Electricity Boards into separate entities like generation, transmission and distribution units. There was rationalization of the power tariffs by entrusting it to state electricity regulatory authorities. Immediate metering of substations and introduction of appropriate Management Information System ( MIS ) to locate pockets of Transmission and Distribution ( T&D ) losses were done.

    National Electricity Policy 2005

    • Under the provisions of section III of the Electricity Act, 2003, National Electricity Policy was announced on 2nd February, 2005.
    • It targeted at providing access to electricity for all the households within the next 5 years.
    • Meeting the power demand fully by the year 2012 by involving both public sector and private sector. Energy and peaking shortages are to be overcome and at the same time adequate spinning reserve are to be made available.
    • Enhancing the per capita availability of electricity by over 1000 Kwh per year by the year 2012.
    • Supplying of quality and reliable power having specific standards at reasonable price and in an efficient manner.
    • There should be minimum lifeline electricity consumption of 1 Kwh per day per household as a merit good by the year, 2012.
    • Protection of the interests of consumers.
    • Commercial viability and financial turnaround for the Electricity Sector.

    Tariff Policy 2016

    The objectives of Tariff Policy 2016 are

    • Ensuring the consumers the availability of electricity at fair and competitive rates
    • Promoting transparency, predictability and consistency in regulatory approaches around different jurisdictions and try to reduce the perceptions of regulatory risks
    • Promoting efficiency and competition in day to day operations and trying to improve the quality of supply of electricity
    • Attracting new investments by ensuring financial viability of electricity sector
    • Promoting the renewable sources for electricity generation
    • For serving the consumer better, evolving a robust and dynamic electricity infrastructure
    • Supplying sufficient and uninterrupted power to the consumers of all categories.
    • Producing sufficient capacity in advance which includes reserves in generation, transmission and distribution for reliable supply of electricity to the consumers.