The hidden price of power cuts – government subsidy for Corporates?

Two news articles in recent days triggered off this chain of thoughts. One on the proposal to increase power-cuts and the other on the increased off-take of diesel.

While State Governments are debating whether they should resort to 4-hour power cuts or 7-hour power cuts, nobody seems to notice the real hidden costs of the power cuts for the governments. No, I am not talking about tax-revenue losses due to productivity losses. It is a lot more direct and at-your-face-but-still-unnoticed…the inadvertent subsidy that the government ends up providing for Corporates, through diesel.

Regular electricity to corporates is not subsidised. Only farmers get electricity at subsidised prices or for free – it is a different question to be answered, if the farmers get power at all, whether it is free or paid! But corporates pay fairly reasonable prices for power.

But what happens during power-cuts? The poor farmer, small businesses and the housewifes are the only ones who are affected. All large corporates run diesel-powered generators. Diesel is heavily subsidised by the government. Yes, the corporates will have to spend more on diesel-power-generation. But the bigger loser is the government! Instead of providing power at a profit, it is selling diesel at a heavy loss.

Meanwhile, the Left, which is the prime mover behind subsidised diesel, is going all-out to stall the nuclear deal, through which India has, atleast, a theoretical possibility of obtaining sustainable self-sufficiency in power generation. Does the Left realise that, through their own mis-deeds, they are allowing the subsidies, intended for the masses, to be diverted to the very-corporates, which they, supposedly, hate?

Need I say more? We look at scarcity of power, in isolation, and react to it by resorting to power-cuts as if that will resolve the whole issue. When will we learn to analyse the whole sequence of events before embarking on any activity?

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