Power sector NPAs are not a banking problem

  Power sector NPAs are not a banking problem

Around 22% of India’s installed power-generation capacity burdens(बोझ) Indian banks as non-performing assets (NPA). There is little scope of restructuring(पुनर्गठन) them through the Insolvency(दिवाला/शोधाक्षमता) and Bankruptcy Code route, because the problem lies in bankrupt politics that makes state utilities(उपयोगिताओं/लाभ) incapable(असमर्थ/अयोग्य) of buying power from generators and not with the generation projects per se. Unless the politics is reformed, buying into power generation will prove a dud investment. Therefore, the scheme the banks have come up with, of converting their debt into equity in the power assets(संपत्ति/संपत्ति) and selling these on to patient capital, makes sense.

However, the banks’ hope that the National Investment and Infrastructure(आधारिक संरचना/पूर्वावश्यकता) Fund would come forward to willingly(स्वेच्छा पूर्वक/खुशी से) hold these assets might prove unrealistic(अवास्तविक). The banks should partner Power Finance Corporation or PTC India Financial Services to create the patient capital they need. The way forward is to follow through with power tariff reforms and mandate(शासनादेश) transparency in utility finances. Subventions that may be necessary to meet the ambitious(महत्त्वाकांक्षी/अभिलाषी) target to supply power for all by December need to be specifically targeted and budgeted upfront. The Reserve Bank of Indiahas, rightly, refused to grant any special treatment for stressed power projects, and their resolution(समाधान/प्रस्ताव) would be as per the RBI’s 180-day timeline. The Ujwal Discom Assurance Yojana (UDAY) scheme needs close monitoring(निगरानी), including quarterly publication of utility results. States have issued bonds worth .`2.32 lakh crore to take over their utilities’ debt. But with giveaways, patronage(संरक्षण/सहायता) of theft and populist giveaways par for the course, the whole UDAY scheme can well come to nought and at a huge national cost. Without reform in the power sector, lending to power cannot be redeemed.


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Important Vocabulary

Synonyms: anxiety, concern, difficulty, duty, hardship
Antonyms: advantage, aid, assistance, benefit, blessing

Synonyms: service, account, adequacy, advantage, advantageous
Antonyms: disadvantage, handicap, hindrance, inappropriateness, inefficiency

Synonyms: impotent, inadequate, incompetent, ineffective, ineligible
Antonyms: able, adequate, capable, competent, effective

Synonyms: decision, ettlement, verdict, aim, boldness
Antonyms: indecision, apathy, cowardice, fear, flexibility

Synonyms: aegis, auspices, backing, encouragement, financing
Antonyms: attack, blockage, disapproval, discouragement, harm

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