India's Billion-Dollar Power Reforms: A Privatization Push

The Indian government is contemplating a substantial bailout plan, over 1 trillion rupees, for state-controlled power distribution firms burdened by debt. According to insider sources and a Ministry of Power document, the funds come with strings attached; utilities must either undergo privatization, transferring managerial control, or remain state-controlled but listed on a stock exchange.

The reform, pushed by Prime Minister Narendra Modi, aims to rectify inefficiencies in state-run electricity distribution, identified as a vulnerability in India's energy framework. Currently, the Power and Finance Ministries are hashing out the final bailout details, with official announcements expected during the February budget revelation.

As per the proposal, states will need to meet a 20% power consumption quota from private firms and handle part of the debt. Options include creating new distribution entities with majority private ownership or partial privatization of existing ones, granting low-interest federal loans. Non-privatizing states must list utilities on stock exchanges to receive federal loans. Previous efforts faced pushback from workers and opposition parties, but privatization is deemed necessary to enhance operations and finances.