Unless the power generation companies in India pay their debt, which will reach 2.6 lakh crore by 2020, it won't be possible to streamline the power generation and distribution process.

In the past four years, India has mined more coal, built more power plants, and numerous power generation and distribution companies have connected millions of homes to the grid in this span. But now, in 2019, all these companies are saddled with record debt, which may hinder in achieving a key government promise.

Brief History of Electricity Generation in India

When India became independent in 1947, the nation owned a power generating capacity of 1,362 MW only. The distribution of electric power and its generation was carried out primarily by private utility companies. Notable amongst these and in existence is Calcutta Electric. Initially, electricity was only available in a few urban areas and rural regions; villages didn't have the luxury of electricity.

Following 1947, new electricity generation, transmission, and distribution in the rural industry, as well as the metropolitan centers (which wasn't served by private utilities), came under the purview of State and Central government agencies. State Electricity Boards (SEBs) were formed in all countries.

Current Scenario Electricity Generation in India

As asserted by Power minister Raj Kumar Singh, 24x7 power is the government's priority. Furthermore, a government dashboard says 99.99% of rural homes – which account for nearly 7 in 10 Indian homes – now have grid power.

In the origin of the contradictions involving electrification, excess electricity, and also the inability to provide Indian houses with it -- is a debt that burdens every state-owned electricity distribution company. These problems are impairing their ability to build and preserve gear and power grids.

The inability or denial of state governments to increase power invoices, has led to more borrowing, power shortages and forced distribution companies reluctant to buy available electricity, leading to continuing blackouts and irregular electricity supply.

According to a study by Crisil, a market research agency, this debt will clock 2.6 lakh crore by 2020. When that happens, the debt will reach the same as in 2015, when the government of India was forced to introduce a bailout program 'Ujwal DISCOM Assurance Yojana' for distribution companies.

Vibhav Nuwal, Director of REconnect, a Bangalore based energy solutions company in an interview said, "Apart from the inefficiencies of distribution companies, the much bigger problem to deal with is to address a large amount of free power that is being distributed for irrigation and rural households in the country." If this free electricity distribution is metered and billed, there are high chances that power generation companies in india that may reduce their losses.

Nevertheless, if the government desires to achieve its target of 24x7 power, they must consider taking the following steps:
accelerate the process of installing electricity meters,
actively replace old or defective meters,
ensure that unpaid bills are taken care of and
put an end to electricity theft.

Moreover, the government must also address the problem of ensuring power stations are profitable before building more or reducing stranded assets and low utilization.