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Impact of institutional reforms on the performance of distribution utilities in India – A dynamic panel data analysis

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  • Kathuria, Vinish

Abstract

The Indian power sector has seen significant institutional changes in the last two decades. After more than 20 years of reforms, the distribution segment is still incurring losses. To quantify these institutional changes, we construct a reform index and then employ data of 55 power utilities from 29 Indian states for 2007–08 to 2015–16 to see the impact of this index on their financial and technical-cum-commercial performance. This paper contributes to the literature in three ways: a) accounting for the maturity of the reforms while calculating the index, b) relying on the dynamic nature of the reforms, and c) carrying out the analysis at the utility level. We find that once the dynamic nature of the data is accounted for and utility-specific variables are controlled, the reform index influences both the financial and the technical-cum-commercial performance of the utilities. An important policy implication of the present study is that as long as the cost-reflective tariff is still prevalent, the commercial viability of utilities cannot be assured.

Suggested Citation

  • Kathuria, Vinish, 2021. "Impact of institutional reforms on the performance of distribution utilities in India – A dynamic panel data analysis," Energy Policy, Elsevier, vol. 158(C).
    • Handle: RePEc:eee:enepol:v:158:y:2021:i:c:s0301421521004304
    DOI: 10.1016/j.enpol.2021.112560
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    More about this item

    Keywords

    Reforms; Unbundling; Price-cost margin; AT&C losses; Dynamic panel data;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

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