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ID:
176736
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| Summary/Abstract |
This paper investigates the role of corporate governance (CG) on the financial and operational (technical-cum-commercial) performance of India utilities. The Indian power sector, in the past, was mainly driven by electoral and political considerations that led to an unsustainable level of performance. The Indian Electricity Act 2003, brought a common framework of reforms at the national level. After more than fifteen years of reforms, results at the distribution end are still mixed. We argue that the ‘external causes' unleashed from the reform process should be a catalyst to more significant internal management changes. To quantify these changes, we compute the CG index and then employ data of 48 power utilities from 19 Indian states for the year 2016-17 to see the impact of this index on their performance. We find a positive relationship between the CG index and the performance of the utilities. An important policy implication is that improvement in CG is worth pursuing even in utilities where arm's length between government and the utility is not possible, as the government is the owner of these utilities.
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| 2 |
ID:
181438
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| Summary/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
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