‘India makes progress in power sector’

‘India makes progress in power sector’

By NAVTAN KUMAR | NEW DELHI | 10 September, 2017
The study further said that improving the pace of implementation will be highly challenging in reforms such as those for employment generation, banking sector and power sector.

Centre’s reform measures are picking up pace but tangible results in terms of investments would be seen only after 2019. According to a report, goods market efficiency and institutions are in the advanced stage of implementation while other sectors in middle or initial stages.

The study, “Insolvency and Bankruptcy Code: Protecting stakeholders, improving ease of doing business”, done by trade body Assocham, in association with rating agency Crisil, notes that India has made significant progress in the power sector in the last three years which has resulted in improved access to electricity, better financial health of discoms and promotion of renewable energy generation.

However, operational performance of discoms remains a concern, says the report, besides intensive rural electrification in UP, Bihar and north-eastern states also remained low. The study says that the country’s energy sector is facing low capacity utilisation in power generation as plant load factor is estimated to remain low at around 62% till 2018-19.

Talking about the various reform measures undertaken by the Narendra Modi government, the study says that the majority of reforms are in the initial and middle stages of implementation. While a number of reforms have been announced, execution of the most of the reforms remains a work-in-progress.

The study grouped these reforms under eight important pillars of competitiveness (out of the 12) used by the World Economic Forum’s (WEF) Global Competitiveness rankings. It found that while the steps taken by Modi government do not create an immediate and strong upside, they improve India’s ability to achieve faster and sustainable growth over the medium term.

Of the eight pillars of competitiveness, reforms under health and education, and technological readiness are in the initial stages of implementation; macroeconomic environment, infrastructure, and financial market development are in the middle stage; and goods market efficiency and institutions are in the advanced stage.

In the remaining pillar of labour market, concrete reform measures are still pending, the report says, adding “nevertheless, the Modi government is trying to improve the implementation in many areas, especially in reforms related to the macroeconomic environment, goods market efficiency, infrastructure and institutions”.

The areas of competitiveness where there should be a significant improvement are goods market efficiency and institutions. However, improving the pace of implementation will be highly challenging in reforms, such as those for employment generation, banking sector and power sector, the report says. Moreover, some of the earlier neglected areas, such as health, education and the labour market, continue to see a slow progress.

The study says that, on the macro-economic front, weak investments challenge sustainable growth and private investments are unlikely to pick up before 2019 owing to low capacity utilisation and weak balance sheets. It predicts that that large-scale employment generation is difficult in an environment of tepid growth.

As per the report, little progress has been seen in easing labour laws and absence of a uniform simplified labour law continues to deter investments in labour-intensive industries. It notes that concrete reform measures are still pending in the labour market. 

The study further said that improving the pace of implementation will be highly challenging in reforms, such as those for employment generation, banking sector and power sector. Even as some of the earlier neglected areas, such as health, education and the labour market, continue to see a slow progress.

Add new comment

CAPTCHA
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.