The government has launched the Saubhagya scheme with a projected outlay of `160 billion and with an objective of providing household electrification, especially in rural areas. The scheme aims to fund all rural and urban electricity connections, estimated to be above 40 million, which are currently without any access to power. The scheme outlay is estimated to be funded by 60% government grant, 10% by respective states and 30% through loans (for special category states, it is 85%, 5%, 10%, respectively). The Rural Electrification Corporation is the nodal agency for operationalisation of the scheme throughout the country.
The implementation of the Saubhagya scheme will positively impact the power sector as its execution is likely to improve energy demand. Even assuming the consumption of 50 units per person per month for 40 million households, the incremental demand rise is estimated at about 24 billion units, which, after adjusting for distribution losses, correspond to 3% increase in energy requirement on all-India basis. In addition, the capital goods industry, especially players in the distribution segment, too will benefit. The thrust of the scheme is on the rural sector, and from a socio-economic perspective, it will lead to better energy demand and improve the quality of life for rural households. It is, however, important that this is implemented in a time-bound manner. On a much larger perspective, the fact remains that higher significant power consumption from the relatively high-tariff industrial and commercial segments will critically drive the overall demand growth and thereby the viability of discoms. Read More…
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