Strategy for New India @75, the latest strategy document published by government’s think-tank NITI Aayog, has recommended a slew of measures to reform the country’s energy sector. These include privatisation of power distribution companies, operationalising commercial coal mining, and breaking up the functions of the oil regulator.

The paper, launched by Finance Minister Arun Jaitley, also calls for bringing oil, natural gas, coal, and electricity under the goods and services tax (GST). Reform the subsidy regime to allow consumers to choose the energy form most suitable to them. And provide farmers an upfront subsidy per acre of land through Direct Benefit Transfer (DBT) rather than providing separate subsidies for fertilisers, electricity and crop insurance.

The paper highlights multiple issues being faced by the energy sector including low per capita energy consumption, heavy reliance on imports and coal use, delays in implementing the expansion of natural gas pipeline network, precarious financial position of power discoms and the need to further improve energy intensity of the economy.

Highlighting the challenges being faced across the sub-sectors, the paper says: “A variety of subsidies and taxes distort the energy market and promote the use of inefficient over efficient fuels. Old inefficient plants continue to operate whereas more efficient plants are underutilised. Non-discriminatory access for private and public sector companies to the gas pipeline network does not exist.”

The paper has called for strengthening the regulatory bodies, promoting use of solar pumps, separating the development and regulatory functions of Petroleum and Natural Gas Regulatory Board, making contract terms flexible to make stranded oil and gas assets functional, and allowing market pricing for blocks that are not functional because of low gas prices.