Saubhagya scheme : Analysis

  • The Pradhan Mantri Sahaj Bijli Har Ghar Yojana, or the ‘Saubhagya’ scheme, aims to make electricity accessible to every household by the end of 2018
  • It is expected to cost a little over ₹16,000 crore, poor households that have no access to electricity will be provided electricity connections free of cost
  • Apart from budgetary fund allocation; its success will depend largely on addressing structural issues that plague the power sector
  • The Saubhagya scheme does very little to address the problem of affordability.
  • Even though it provides electricity connections free of cost, but it will not address the recurring burden of power bills
  • Improving affordability require that supply be increased drastically to lower the price paid by retail consumers.
  • Amidst the government’s claims that India is a power-surplus nation, the power generation utilities remain vastly under-utilised
  • The plant load factor (PLF) of coal and lignite-based plants, an indicator of capacity utilisation of power generation units, has dropped from 77.5% in 2009-10 to 59.88% in 2016-17, according to Central Electricity Authority
  • This is due to demand for electricity from State distribution companies dropping in tandem with their deteriorating financial status.
  • The Ujwal DISCOM Assurance Yojana (UDAY), introduced to restructure the debt of State distribution agencies, has failed to make enough difference to this state of affairs.
  • In the absence of the freedom to sell at a profitable price, they have very little incentive to demand more electricity from power generators, as evident in the constantly falling PLF.

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