Monsoon rains are expected to arrive in India early this summer, providing respite from the power crisis caused by the heat. Expected relief is visible in the price of electricity traded in the market. On May 15, one of its de-agreed units can be bought for only a short time on the country’s largest Indian Energy Exchange. sharply down from 3.35, 10.38 per unit on May 6. This suggests that traders expect the country’s electricity shortage to ease, although we may not have seen our final heat waves and peak demand has tracked the 200 GW level in recent days, a point at which The supply falters in many places above. On its part, the government is working to keep the feedstock supply to coal-fired plants. Railway rakes were recently mobilized for express coal delivery. This week, in a sign that it will not take any chances, the Center asked the Reserve Bank of India (RBI) to relax rules and allow lenders to lend money under its watch, even if they have loans. . was classified as non-performing. Since operations of several projects were stalled due to their failure to repay loans, this waiver is seen as a way to increase production. The idea follows a directive by the power ministry to state-run Power Finance Corporation and REC Ltd. to arrange loans for plants that use imported coal but are under financial stress.
While it is reassuring that the Center has rushed to make up for the time lost in dealing with our lack of power, it should refrain from bending any rules in practice. Such relaxation would not only undermine the integrity of bank regulation, the proposal should be rejected on practical concerns. A plethora of bad loans over the past decade have plagued Indian banks and the RBI’s pandemic relief extension could lead to a deterioration in asset quality that is yet to be seen. To be sure, lenders are not in dire need of infusing capital right now. But to prevent state-owned banks from acting as periodic drains on public money, we must not stifle the reforms undertaken half a decade ago to keep better tabs on credit quality. After all, the health of India’s banking sector is critical to the growth prospects of our economy. Lack of power should not serve as an excuse to deviate from the set policy norms.
India’s scramble for coal is also odd in the context of our push for clean energy and renewable manufacturing. As carbon neutrality calls for the green transition, low-emissions nuclear power has returned to our thought set. With only 6.8 GW currently available, accounting for 1.7% of our total installed capacity, nuclear advocates are increasingly on the ramp-up. Reportedly 10 new nuclear facilities are being envisaged. Once a huge investment is made in setting up reactors, they can generate clean electricity for decades at a relatively low running cost. However, this doesn’t account for the hard-selling security burden. A proper cost calculation should also find out how much extra we will have to spend on the spent fuel. Since the disposal of nuclear waste is very expensive, the bill for this cannot be omitted from any cost-benefit analysis. Accident liability is another hitch. Access to global technology and fuels provided by our famous nuclear deal with the US has resulted in an abundance of such plants as reactor manufacturers seek compensation from the risks of a recession. If given, we have to take that responsibility ourselves. We need more electricity, no doubt about it. But today’s shortfall should not elicit a knee-jerk reaction.