Efficiency gap in the country’s
power sector costs the economy 04 per cent of GDP every year. This amounted to
a total loss equivalent to $86 billion in FY 2016. India was at the 80th spot
among 137 economies in the reliability of electricity supply as per the 2018
Global Competitiveness Report. Â Analyzing the consequences of
this loss, a recently-released World Bank report points out that the income of
rural households in the country can be increased by $09.40 billion and business
losses worth USD 22.70 billion can be eliminated with 24 hours access to power
supply. Â Much of the energy inefficiency
is attributed to the shortage of coal supply, which was as high as 14% in
FY2016, says the report. Â The report says that electricity
subsidies provided by the government and inefficient power generation,
transmission, and distribution of power play a major role in power shortages. In
2016, around 20% of electricity generated was lost during transmission and
distribution. This is the highest loss rate in the world. Report further adds
that industrial electricity tariffs become less affordable and competitive due
to power subsidies to households and farmers. Â The report recommends reforms in
the electricity sector to restore market pricing and improve efficiency. This
will complement traditional investments to increase power supply and expand
access to reliable electricity. Â Reliable access to electricity
will have a positive impact on Gender Equality by increasing women’s employment
and girls’ study time. It will lead to lower use of kerosene lamps which would
improve health and the environment. Â Coal allocation and delivery need
to be more efficient and competition in coal and electricity supply needs to be
encouraged. Energy prices should be rationalized to reflect the actual cost of
supply. Incentives should be given for the promotion of more efficient power
generation and delivery. Â Social assistance should be
provided to help people deal with higher energy prices. India has made great progress in
expanding access to power in recent years. However, many people still lack
access to electricity and power shortages harm the economy and consumer
well-being.
Efficiency gap in the country’s
power sector costs the economy 04 per cent of GDP every year. This amounted to
a total loss equivalent to $86 billion in FY 2016. India was at the 80th spot
among 137 economies in the reliability of electricity supply as per the 2018
Global Competitiveness Report.
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Analyzing the consequences of this loss, a recently-released World Bank report points out that the income of rural households in the country can be increased by $09.40 billion and business losses worth USD 22.70 billion can be eliminated with 24 hours access to power supply.
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Much of the energy inefficiency is attributed to the shortage of coal supply, which was as high as 14% in FY2016, says the report.
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The report says that electricity subsidies provided by the government and inefficient power generation, transmission, and distribution of power play a major role in power shortages. In 2016, around 20% of electricity generated was lost during transmission and distribution. This is the highest loss rate in the world. Report further adds that industrial electricity tariffs become less affordable and competitive due to power subsidies to households and farmers.
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The report recommends reforms in the electricity sector to restore market pricing and improve efficiency. This will complement traditional investments to increase power supply and expand access to reliable electricity.
Â
Reliable access to electricity will have a positive impact on Gender Equality by increasing women’s employment and girls’ study time. It will lead to lower use of kerosene lamps which would improve health and the environment.
Â
Coal allocation and delivery need to be more efficient and competition in coal and electricity supply needs to be encouraged. Energy prices should be rationalized to reflect the actual cost of supply. Incentives should be given for the promotion of more efficient power generation and delivery.
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Social assistance should be provided to help people deal with higher energy prices. India has made great progress in expanding access to power in recent years. However, many people still lack access to electricity and power shortages harm the economy and consumer well-being.