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The electricity chokepoint in Tamil Nadu public finance

Author

Listed:
  • Charmi Mehta

    (xKDR Forum)

  • Radhika Pandey

    (National Institute of Public Finance and Policy)

  • Renuka Sane

    (TrustBridge Rule of Law Foundation)

  • Ajay Shah

    (xKDR Forum)

Abstract

Indian electricity utilities face significant financial stress on account of unfunded subsidies. This paper places the problem of electricity subsidies in the context of a debt sustainability analysis (DSA) for Tamil Nadu. We find the state fails on five out of six indicators for debt sustainability. We integrate the electricity sector into the conventional DSA, giving a "corrected DSA". These modifications are material in changing our sense of the fiscal situation in the state. There are concerns about the extent to which the current fiscal path is sustainable. Fiscal stress harms investibility in electricity. Resolving the problems of electricity policy is a critical component of the development of the medium-term fiscal strategy for the state government.

Suggested Citation

  • Charmi Mehta & Radhika Pandey & Renuka Sane & Ajay Shah, 2024. "The electricity chokepoint in Tamil Nadu public finance," Working Papers 31, xKDR.
    • Handle: RePEc:anf:wpaper:31
    as

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    File URL: https://papers.xkdr.org/papers/MehtaPSS2024_tn_pf_electricity.pdf
    File Function: First version, 2024
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    References listed on IDEAS

    as
    1. Datta, Pratik & Pandey, Radhika & Patnaik, Ila & Shah, Ajay, 2023. "Understanding deviations from the fiscal responsibility law in India," Working Papers 23/399, National Institute of Public Finance and Policy.
    2. Greiner, Alfred & Kauermann, Göran, 2008. "Debt policy in euro area countries: Evidence for Germany and Italy using penalized spline smoothing," Economic Modelling, Elsevier, vol. 25(6), pages 1144-1154, November.
    3. Mr. Santiago Acosta Ormaechea & Mr. Leonardo Martinez, 2021. "A Guide and Tool for Projecting Public Debt and Fiscal Adjustment Paths with Local- and Foreign-Currency Debt," IMF Technical Notes and Manuals 2021/005, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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