Problems faced by the power sector are as follows:
(a) The installed capacity of India to generate electricity is not sufficient enough to meet an annual economic growth of 7%.
(b) The state electricity Boards ( SEBs) that distribute electricity suffered a great loss of more than Rs. 500 billion due to transmission and distribution of electricity.
(c) The wrong pricing of electricity like supply is electricity at subsidized rates to agricultural sector and theft of electricity has exaggerated the problems of power sector.
(d) The high power tariffs and prolonged power cuts is another challenge in the power sector.
(e) The thermal power station faces the scarcity of the raw materials to generate electricity. The following reforms have been initiated :
(a) Privatisation in power generation sector: The government earlier had the monopoly in the generation and distribution of electricity. Now, private sector has been given the rights to generate power.
(b) Privatisation in power transmission: The Indian government has approved Data power and Power Grid Corporation of India for constructing transmission networks in ***** venture.
(c) Power for all by 2012 : The ministry of power has set up an objective of ‘Power for all by 2012’ to achieve the target of 1000 kw./Hr. (Units) of per capita consumption of electricity in India, This objective is aligned with the objective to achieve an economic growth of 8% p.a. The main motive of this target is to improve the quality of power, improve the commercial viability of power industries and to provide power to all.
(d) Setting up regulatory mechanism: The Central Electricity Regulatory Commission (CERC) along with State Electricity Regulatory states under the Electricity Regulatory Commissions Act 1998. These commissions and authority regulate tariff, promote efficiency and competition.
(e) Encouraging FDl: In order to achieve the target of power for all by 2012, the ministry of power aimed at attracting US $ 250 billion of investment (FDI and Domestic Investment Combined) into the power sector.
(f) Accelerated Power Development and Reform Programme (APDRP): APDRP has been initiated in the year 2000-01 with the motive of improving financial viability, reducing transmission and distribution losses and promoting transparency through computerization.
