Clearly unnerved by the Trinamul Congress’ departure from UPA-2, the Manmohan Singh government on Monday continued with its reform agenda, with the Union Cabinet approving restructuring of the Rs 2 lakh crore debt of ailing state electricity boards to bring them back on track.
Another big-ticket reform measure — of hiking the price of PDS sugar from the current Rs 13.50 to Rs 24 — was also on the Cabinet’s agenda, but a final decision could not be taken as food and civil supplies minister K.V. Thomas was not present at the meeting.
Also, giving relief to eight million Central government employees and pensioners at a time when it has hiked diesel prices leading to high inflation, the government decided to hike dearness allowance (and relief for pensioners) by seven per cent, to cost the exchequer an additional Rs 7,408 crores annually. This will be effective from July 1, 2012, and arrears will be due.
An official release said the SEBs’ restructuring plan requires the electricity boards and state governments to take a slew of measures to reorient their debt with the support of a transitional finance mechanism provided by the Centre.
“The scheme is going to be effective as soon as it is notified, and will remain open upto December 31, 2012. Support under the scheme will be available for all participating SEBs on fulfilling certain mandatory conditions as outlined in the proposal,” the release said.
It added: “Fifty per cent of the outstanding short-term liabilities up to March 31, 2012 are to be taken over by state governments.”