The recently announced power sector reforms by the Indian government are a step in the right direction as easier and assured access to power will help boost productivity of the manufacturing sector, says a Nomura report.
According to the Japanese financial services major, besides a shortage of supply, poor T&D infrastructure and a large amount of pilferage are some of the key issues plaguing the power sector.
On November 20, the government approved three key projects in the power sector targeting improvement of transmission and distribution (T&D).
It approved Rs 43,033 crore rural electrification scheme, Deendayal Upadhyaya Gram Jyoti Yojana. This scheme would replace the existing Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY).
“This should strengthen power distribution infrastructure in rural areas and help the government reach its goal of being able to provide power 24/7 across the country,” the Nomura report said.
In addition, the government approved Rs 5,200 crore scheme for strengthening power transmission and distribution network in six North-east states.
It also approved Rs 32,612 crore scheme for strengthening sub-transmission and distribution network in the urban areas.
The Nomura report noted that these schemes should help address some of the issues and are a step in the right direction.
“These announcements, following the recent coal e-auction guidelines indicate that reforming the power sector remains one a key government priority,” it said.
The Japanese brokerage firm further said that “in our view, easier and assured access to power will help boost the productivity of the manufacturing sector”.