New Delhi: Electricity distribution companies (discoms), which buy power from generators and transmission units and sell it to final users, went 27% deeper into the red in December 2018, compared to the same month, 2017. 

Discoms now owe nearly Rs 42,000 crore to generating companies like state-owned giant NTPC, as well as private players like Adani, Tata Power and Sembcorp. Payments are delayed, often up to 580 days. Both state and central governments have joint jurisdiction over this sector; both must cooperate to repair it. 

Some states, including biggest defaulter Uttar Pradesh, have dysfunctional administrations, unable or unwilling to nudge non-paying voters to clear bills.

Maharashtra, Karnataka, Tamil Nadu and Andhra Pradesh are better governed, yet rank among the top 10 defaulters, who together make up 80% of the money owed, ultimately, to generating units.
 

It costs money to build power plants, buy fuel, run turbines, transport electricity, install meters and pay utility employees. If these costs cannot be recovered, it is financially impossible to run a viable electricity network. Generators have cut back on production.

So, capacity utilisation across all thermal generators fell from a little more than 62% in January 2018 to 60.6% this January. India dreams of becoming an economic superpower; it cannot with a bankrupt electricity sector. Surveys show that people across income classes are willing to pay for reasonably-priced power, if assured of quality supply. The alternative, widely used in power-deficit areas, is electricity generated by captive diesel engines, which costs several multiples of grid power rates.

Yet, politicians across party lines persist with free power and patronage of power theft, so what if ruling parties have changed repeatedly in Punjab, even though each has promised free farm power. Politicians must summon the will to make consumers pay for power, and supply stable, reasonably priced power to voters. This is the only way to salvage the power sector. Mere financial engineering, à la UDAY, is no solution.