• Need for better management of grants-in-aid for power sector

    Comptroller & Auditor General of India (C&AG) in one of their latest Audit Reports No.34 of 2016 has highlighted that grants-in-aid given by the Central Government to its Power Sector has increased to Rs. 12388 crore during the last two financial years amounting to 27 Office of Ministry of Power`s (MoP)`s total revenue expenditure. The grants have flowed primarily under Deen Dayal Urja Jyoti Yojana (DDUJY) for electrifying village households, on augmenting the Integrated Power Distribution System (IPDS) for strengthening the distribution network, as well as to the Power Safety Development Fund (PSDF) for disbursements towards promoting efficiency and safety in grid operations. Major portion (97 %) of the grant-in-aid funds of MoP were intended for creation of assets. C&AG have however pointed out that there were lacunae in fund management by the recipient agencies.
    Audit has critised MoP for failure to ensure timely utilization of the grants, long-drawn procedure for transfer to establishments and organizations which were to utilize these resources and parking of the funds at intermediate stages leading to delayed end-use. Asset registers required to be maintained under Fiscal Responsibility and Budget Management Rules : 2004 were not properly prepared, thereby not enabling monitoring on whether the very purpose for which a portion of the grants was provided ie. for asset creation, was achieved.
    Shortcomings as above are all the more regrettable because, the funds were not channelized through the Public Fund Management System (PFMS), which is an on-line network operative for tracking fund flows and ensuring that excess funds do not remain in a transitory state for unduly long periods before end-use. Audit has given an example of a major part of a grant-in-aid amounting to Rs. 146.79 crore to Power Finance Corporation (PFC) in (2015-16), intended for improvement of power systems in the states, was unjustifiably retained by PFC unutilized for nearly two months, with only Rs. 50.31 crore disbursed to the state utilities. While the Central Government justifiably advocates the benefits of digitization, electronic networking of transactions, etc., the well organized system – the PFMS – instituted as a sequel to the recommendations by the Rangarajan Committee (a committee set up in the late 1990s under C. Rangarajan : former Chief Economic Adviser for efficient management of public expenditure), has not been availed of adequately.
    Though the investment scenario in the power sector as a whole is presently positive, the Government sector needs to upgrade its management. This is necessary from both the social angle as well as economic perspective. The uneven installed capacity throughout the country needs redressal. While maximum (36 %) of the present overall installed capacity is in the western region, as per Central Electricity Authority`s November 2016 report, Jammu & Kashmir and the North-East, despite their huge potential, have only 1.99 % and 1.73 % respectively, of the country`s installed capacity in the state and central sectors combined. The distribution and transmission capacity have also to be boosted in both the extremities of the country. While there is an improvement in extending the overall transmission network – 28114 circuit-km installed during the (2015-16) period vis-à-vis 22107 circuit-km during (2014-15), the MoP`s grants-in-aid could help measurably improve equity and efficiency of power generation, transmission and distribution, as well as grid safety through optimum utilization of the resources downloaded from the PSDF.
    As part of the national clean energy drive, a necessity from the national health perspective as well as part of our commitment to the international consensus on climate change ie. UN Framework Convention for Climate Change obligating India to reduce carbon emissions 20-25 by 2020 vis-à-vis the level of 2005, more and concerted emphasis on non-conventional and solar energy sources is required. Solar energy is an important alternative source needs to be promoted. A reduction in grants-in-aid budgeting by MoP may be appropriate, and the manner of its distribution needs a techno-economic reappraisal. Instead of the present trend, increasing the allocation for Ministry of Non-Conventional & Renewable Energy (MNRE) may be more judicious. Reorienting of the government grants-in-aid towards promotion of alternative energy, solar energy development , its distribution through grid connectivity and in an cost-effective manner, may be in the national interest.
    Grid connected solar energy generation and distribution was `nil` in the beginning of the Eleventh Plan. It rose to 2656 MW in March 2014, but was 0.35 percent of the solar energy potential of the country amounting to 478990 MW. At present, the quantum of solar energy is transmitted through grid connectivity is not substantially more. Government grants may also be deployed on metering of this energy usage. The CEO of NITI Aayog has recently emphasized this point. C&AG through another Report – 34 of 2015 – which is a critique on the Government`s performance in the MNRE sector as at the end of 2014, had highlighted that of the ten states endowed with substantial solar energy potential, they had exploited a meager 2.56 %. Gujarat and Rajasthan were the two states which had operationalised more than 50 % of the developed capacity, whereas, Jammu & Kashmir and Himachal Pradesh despite having a total solar energy capacity of 33840 MW, had contributed negligibly.
    Therefore, there is a case to restrict disbursements of government grants-in-aid exclusively for research and development undertaken in Government establishments like power training institutes, and autonomous bodies working in the areas of innovation towards system improvement , safety of operations and energy conservation. The major public sector enterprises like Power Grid Corporation of India, PFC and Rural Electrification Corporation should be left to themselves to work in these areas with their own investible resources and even utilising their corporate social responsibility funds. A reorientation in the deployment of Government grants-in-aid in the power sector is therefore warranted. Nick Vigil Womens Jersey

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