Power pressure on states’ fiscal consolidation

The state power utilities’ (SPUs) losses are not a serious fiscal consolidation concern at the aggregate level. However, they are a serious threat for fiscal consolidation in a few states. The inability to resolve issues such as reducing aggregate technical and commercial (AT&C) costs, cross-subsidisation and tariff hikes may lead to a structural deficit. SPUs’ losses could threaten the fiscal consolidation plan for five states, as set out in the Thirteenth Finance Commission (TFC).

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