What could be the total economic cost imposed by distortions in the power sector on the Indian economy annually? The figure was a staggering $86.1 billion, or roughly 4.13 per cent of the gross domestic product (GDP) in financial year 2015-16, according to the World Bank.
This includes a fiscal cost, consisting of subsidies worth $8.8 billion (0.42 per cent of GDP) in 2015-16 to distribution utilities; the excessive health cost, borne by the population, estimated at $35.9 billion; and external costs, due to excessive emissions of global warming gases, at $14.1 billion; apart from institutional and regulatory costs.
The report titled “In the Dark: How Much Power Sector Distortions Cost South Asia” was released today. It is authored by Fan Zhang, senior economist in the Office of the Chief Economist of the South Asia Region at the World Bank. Read More