The current brinkmanship between financially stretched states and a fiscally hawkish Centre has turned the idea of market federalism into a game of my way or the highway.
A few weeks ago, 12 states were barred from trading on India’s short-term electricity markets as a penalty for non-payment of dues to power generation companies. The defaulting states’ power distribution companies cumulatively owed Rs 5,000 crore, which had been pending for a while. The dues were paid, the bar was lifted and life seemingly moved on. But the stakes have been raised in a sector where financial brinkmanship between financially stretched states and a fiscally hawkish Centre has been a perennial struggle.
The Centre has made it amply clear, through a series of actions, that it plans to address …
Rohit Chandra is an assistant professor at IIT Delhi’s School of Public Policy and also a visiting fellow at the Centre for Policy Research. Primarily a political scientist and economic historian, his academic work spans the areas of energy policy, state capitalism and infrastructure finance; he has spent the last decade studying the coal and power sectors.
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