The Indian Cabinet has approved the Integrated Power Development Scheme, an ambitious debt-recast and reform package worth Rs 45,000 crore (US$6.85bn), aimed at reviving loss-making state power utilities, strengthening transmission and distribution systems, and including provisioning of solar panels, metering of distribution transformers, feeders and consumers in urban areas and IT enablement of the distribution sector.
Indian states will receive incentives, such as cheaper power or more coal if they adopt the Scheme and take over 75% of the debt of distribution companies (50% in the current fiscal year and 25% in the next); the utilities' debts will not be included in the fiscal deficit of the states, which will issue bonds on the market. The debt not taking over by the state will be converted into loans or bonds.
The Indian government aims to reduce transmission and distribution (T&D) losses in the power sector from the current 22% (in 2014, distribution losses amounted to 18%, plus 4% of transmission losses) to 15% in 2019.
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