Centre coaxes States to cut power tariff slabs
As part of an effort by the Centre to build a political consensus in favour of standardising electricity tariffs across the country, Minister of State (Independent Charge) for Power and Renewable Energy, RK Singh, on Thursday coaxed State governments to reduce the number of slabs for selling power.
After the Conference of Power and New & Renewable Energy Ministers of States and Union Territories, Singh told newspersons that “it has been decided (at the meeting) that the number of power tariff slabs across States will be reduced to 12 to 15 from up to 90 slabs existing today in some States.”
However, the success of this proposal will hinge on the States’ willingness to implement it as electricity is a State subject and has political as well as financial implications.
If implemented, this would mean moving closer to bringing electricity under the ambit of the Good and Services Tax regime. The current variation in power prices and the differing tax structures make it difficult to have a uniform tax rate on power across the country. Once there is parity between power tariff slabs, it will be easier to have fit them in the GST slabs.
Singh also said the cross-subsidy on power should be restricted and consumers should not be burdened by the inefficiencies of power distribution companies.” In effect, he was hinting at a likely shift of subsidy from the seller (in this case, the distributor) to the consumer.
The government aims to bring cross-subsidy levels down to 20 per cent from the current 200 per cent in some cases, he added.