The latest hike in electricity tariff in Jammu & Kashmir is fraught with serious consequences. The second such hike since October last year, it incredibly marks a cumulative 33 per cent increase in six months. State Electricity Regulatory Commission’s contention that the process of the hike and the underlying factors are part of a transparent exercise is of little consequence. This hike is symbolic of the governance failure in this state, wherein the tough outcomes of a failure are transferred to the citizens. J&K state is already one of the lowest energy consumers in the country. The prevalent load shedding and the power quality must be among the worst anywhere in the developing world. All sectors of the economy – the basic industries, the nascent services sector and the struggling agriculture – have been hard hit by the energy shortage. Tourism is one of the sectors taking the brunt of power shortage – with the visiting tourists openly voicing their angst at the situation. J&K is faced with intense weather conditions, so its needs for energy are not unique. The people in the state have no alternative energy source available. If the government thinks that this hike will help in curbing energy use and enhancing its revenue collection, it has got it entirely wrong. A further drop is energy consumption will have an even more serious impact on the economy – it will impact production and productivity across all sectors – thereby impacting the state’s tax revenues as well. This kind of power tariff hike is beyond the capacity of an average household to bear. Industrial and commercial houses will find it harder to absorb this escalation, as a result of which the cost hike will pass on to the consumers. In the end, lower consumption and demand will hurt government’s tax revenues. The government must find a sustainable way of fixing the T&D losses and not resort to these extreme steps in an environment marking the beginning of an economic revival.

Lastupdate on : Fri, 20 Apr 2012 21:30:00 Makkah time
Lastupdate on : Fri, 20 Apr 2012 18:30:00 GMT
Lastupdate on : Sat, 21 Apr 2012 00:00:00 IST