Cut in electricity bills - Is it really reasonable?
Cut in electricity bills - Is it really reasonable?
A few days before, the Delhi government announced 50% cut in power tariffs and also ordered the audit of power companies by CAG. Consequently, Haryana and Maharashtra govt. followed the suit and announced a decent cut in electricity prices and more states are expected to slash the power tariffs in near future. But whether these slashed bills are reasonable or just a pre-election stunt is the big question.
For the topic
1. The power companies present wrong bills and show their increasing losses to justify the soaring electricity prices. Thus, the cut in power tariff was much awaited and it questions the claims of power firms.
2. The inability of power companies to produce and regulate electricity as per the growing demands can’t be tolerated at cost of consumer’s pocket.
3. The subsidy given for the slashed power tariff was long due especially for the middle and lower middle class who couldn’t afford to pay for the electricity at such high prices.
4. When power firms getting subsidy from govt. is not questioned then there is no point of putting the subsidy to customers under the scanner.
5. The slashed power bills will also provide relief to small and medium scale industries and agriculture and would thus benefit the economy.
6. With lower cost of electricity, cost of production will also come down and it will help the customers to recoup from inflation.
7. Subsidy given for power cuts is very minimal as compared to the amount spent in corruption.
Against the topic
1. The fact that power companies are incurring heavy losses can’t be refuted which makes this step a pre-election propaganda.
2. Excessive burden of subsidy on the government can put the already troubled economy in more problems.
3. The undue reduction of power tariffs will prevent people from conserving electricity and they will be more callous towards power consumption.
4. This step initiated by the Delhi govt. has encouraged many other states to take such populist measures to cater votes in the coming elections.
5. The accounts of the electricity department and power producing firms do not favour the unplanned power cut.
6. Such subsidies are generally advocated by the socialist economy whereas India has a mixed economy and socialist measures are not apt for India.
7. The increasing power tariff is a result of high cost of production led by high market cost of electricity. So, there is no valid reason to provide cut in power tariffs.
Conclusion
There is no doubt that increased power bills are a matter of pain for the customers and so the tax- paying citizens must be provided with electricity at reasonable cost. But the process should be well planned from the economic perspective of the state and no hurry should be made in such decisions.
Discussion
- RE: Cut in electricity bills - Is it really reasonable? -Rishika Jalan (04/25/14)
- The Delhi government has recently announced a 50% cut in the power tariffs and electricity prices. Following the footsteps even Haryana and Maharashtra has announced a decent slash in the prices of electricity. This cause undertaken by many states is whole heartedly welcomed by the consumers and various industries. Most of the middle class and low income classed families could not afford to pay the high prices of electricity. With the cut in these prices now electricity can be afforded by them. Many industrial and agricultural units will also benefit from this as their cost of production will go down and they will be able to produce more. This in turn will lead to higher economic revenue coming from the industries. Thus a reduction is the power tariffs is a wise and practical decision.
- RE: Cut in electricity bills - Is it really reasonable? -UDIT HEMBRAM (01/25/14)
- A slash in anything related to basic needs of a person habitat is always welcomed with open hands. But this should justify mutual benefits to both the giver and the taker. The underlying fact that has been missed in the whole clamour for the rate cuts has been fundamentals of subsidy.
Subsidies are granted to bring down economic burden of general pubic on their basic amenities like gas, electricity,kerosene etc. And this subsidy is provided from the state treasury which in turn is earned from varied sources ,a large part of which comes from Taxes .
Now when we talk about providing subsidies on electricity tariff ,we inadvertently ask the tax payer to bear the whole burden as it amounts to paying the regular tariff from the amassed taxes. so it's a indirect way of payment of liabilities .
As for aping such populist measure by other state government it will be imprudent as it is not a permanent solution to the facade. Also it will affect other infrastructural and administrative responsibilities of a state that is also to be served from the state treasury. keeping in mind that a state's income resources are moribund and this additional burden of subsidy in electricity will create an unstable economic condition in the concerned state.
So if rates are to be cut , it should be done at institutional level,increasing production ,setting up more power project ,reducing distribution loss of electricity , curbing unauthorized connection , effective collection of bills and bringing more players into the competition.
