Government Aid Temporary Lifeline To Discoms

The government's stimulus measures will only provide a temporary lifeline to state-owned power distribution companies as the coronavirus pandemic has increased liquidity pressure for these firms, global ratings agency Standard & Poor's (S&P) said. The agency noted that many discoms in India have weak financial health owing to excess debt, loss-making operations, and high transmission and distribution (T&D) losses of more than 15 per cent. A sustainable solution for resolving the weak credit health, excess leverage, and high losses of the discoms is critical to prevent the need for further packages even post-COVID-19. The agency expects power demand to recover but is likely to have its first-ever power surplus in the fiscal year ending March 2021.