Plan outlay has been increased to Rs 9,194 crore from Rs 7,626 crore. Budgetary support will be increased for Tehri and the Nathpa Jakhari to enable these projects to get commissioned by March 2002, the budget declares.

Increased budgetary support is expected to aid NTPC to a large extent as it has a problem in raising funds for new projects. It cannot leverage its balance sheet in the market as it has huge outstandings. Its dues from various state electricity boards total more than Rs 12,000 crore. On account of this problem it can also not sell its stock at a good price.

Given the poor health of SEBs, with none of them getting a return on investment in double digits, the budget proposes Rs 300 crore as interest subsidy on loans taken by SEBs and state generating companies. The interest subsidy will be available only on loans taken from Power Finance Corporation. These loans can be availed for renovation and modernisation of old plants.

The budget promises a new scheme for undertaking renovation and modernisation and for strengthening the distribution system. Under this scheme additional central plan assistance of Rs 1,000 crore will be provided to state and Union territory governments. The budget is hopeful of the new scheme giving a fillip to the reform process.

The budget holds out the caveat that central assistance will be given only to those state utilities which undertake reform. To help SEBs come out of the woods the central government has helped securitise their dues. The budget declares that the securitisation package has been finalised and will be cleared by the government.

The poor health of SEBs is on account of high transmission and distribution losses. T & D losses which stood at 24.5 per cent in 1996-97 have marginally decreased to 24.4 per cent in 1997-98. These T & D losses are due to a variety of reasons as substantial energy sold at low voltage, sparsely distributed loads over large rural areas, inadequate investment in distribution systems, improper billing and high pilferage.