Among other things, free discoms from State control, allow them to set tariff for all consumers and permit private firms into the distribution business 

Faced with an acute power crisis caused amongst others by sudden spurt in power demand in this 
season, the Modi Government has fired all cylinders to tackle the most crucial of all bottlenecks in the way, namely coalwhich accounts for nearly 52 percent of total power generation capacity in 
the country.
During April/May2022, the Union Power Ministry - using powers vested in the Government under Section 11 of the Electricity Act, 2003 - issued directions to (i) all imported coal-based plants (ICB) to operate and generate power to their full capacity and (ii) all generation companies (gencos) based on domestic coal to import at least 10 percent of their fuel requirements (there is a move to further raise it to 30 percent).
Other measures include asking all gencos having captive coal mines to maximize production from their mines; Coal India Limited (CIL) - a central public sector undertaking (CPSU) which contributesabout 85 percent of domestic coal production - to auction its mines ‘not under use’ to private companies; galvanizing railways’ infrastructure to move coal from mines to plants site etc.  
The Government has also announced financial and price support measures to help gencos actually see things happening on ground zero. 
Thus, it has directed the Power Finance Corporation (PFC) and Rural Electrification Corporation (REC Ltd) “to arrange short term loans for a period of six months with adequate safeguards for ICB plants, which are under stress”. It has also allowed ‘pass-through’ of the increase in cost of imported coal under the power purchase agreements (PPAs) of gencos with power distribution companies (discoms).  
The Government’s intent is to increaseavailability of coal- both from domestic and imported sources,by putting more money in the hands of gencos so that they can pay for higher cost imported fuel (in just about two months, its price is up by $100 per ton, courtesy difficult geo-political situation) and even more importantly, allow them charge more from discoms to recover the higher cost.
But things may not pan out as desired.The discoms (mostly owned and controlled by State Governments) may not agree to hike in tariff; besides such revisions are open to challenge in the court. It won’t be easy to sell expensive stuff in the ‘power exchange’either asunder the extant regulations, the tariff chargeable is subject to a cap. As for garnering additional production, effort shere won’t yield results in 
the near term. 
Even if the Government is able to surmount these problems by forcing the buyers (read: discoms) to pay for the higher cost and removing the tariff cap on sales in the exchange, this will push the already fragile discoms into deeper mess.
The discoms are in dire straits because State Governments order them to supply a sizeable chunk of electricity to households and farmers at a fraction of the cost of purchase and distribution or even free (in some states, subsidy accounts for 30-40 percent of discoms’ revenue). Although, States promise to reimburse discoms the excess of the cost over realization from sale, most of themeither don’t reimburseat all or do it partially and that too after delay. This results in huge under-recovery on units sold to HHs/farmers. 
Discoms’underrecoveries are exacerbated by high aggregate technical and commercial (AT&C) 
loss - a jargon for power theft. To offset, they charge high tariffs on supplies to industries and businesses. Despite this cross-subsidization, overall, discoms incur huge loss.
Thanks to persistent losses, as of March 31, 2022, they had piled up a mammoth debt of over `600,000 crore. They also owe about `100,000 crore to independent power producers (IPPs) and other generators in the public sector such as NTPC. 
The efforts to revitalize discoms have been going on for two decades with four major schemes launched in 2002, 2012, 2015 and 2021; yet none has delivered.The last two under the Modi Government deserve special mention.
Under Ujwal Discom Assurance Yojana (UDAY) launched in November 2015, the Centre coordinated a financial restructuring package (FRP) of `400,000 crore for discoms in lieu of their committing to reduce AT&C losses from 20.7 percent during 2015-16 to 15 percent by 2018-19 and reducing the gap between average revenue realisation (ARR) from sale of electricity vis-a-vis the average cost of supply (ACS) or the ACS-ARR gap from `0.59 per unit during 2015-16 to ‘zero’ by 2018-19.
During 2019-20, discoms’ AT&C losseswere 18.9 percent against the 15 percent target for 2018-19, while ACS-ARR gap was `0.42 per unit against the target of ‘zero’ for 2018-19.
In the Union Budget for 2021-22, the Finance Minister, Nirmala Sitharaman launched a ‘Reforms-Linked, Result-Based Scheme for Distribution’ (RLRBSD) with an allocation of over `310,000 crore. Under this scheme also, in lieu of support to discoms, the government set targets for reducing AT&C losses to 12-15 percent and ACS-ARR gap to ‘nil’ by 2025.The release of money - under the Scheme - is linked to their meeting various reform targets.  
As in the past, these are hollow proclamations. Under UDAY also, discoms were required to set their house in order. But, they didn’t. The current AT&C losses at about 25 percent are even higher than 20.7 percent during 2015-16 (when the scheme was launched), Forget reduction. Hence, claims under RLRBSD don’t inspire. 
How willthe crisis triggered by coal shortage and the manner in whichthe government is dealing with it impact discoms’ finances? 
The direction to all ICB plants maximise generation and to domestic coal based plants to do 10 percent/30 percent blending with imported coal will result in sharp in the cost of power purchase by discoms. Since, our political brass won’t let HHs/farmers pay even a paisa more and industries are already crippled by high tariff - `10 per unit plus in most states; hence can’t be further increased, this will end up further inflating their losses.   
In 2015, Prime Minister Narendra Modi had set a coal production target of 1500 million tons (MT) for 2019-20. During 2019-20, India produced around 730 MT. In 2020-21, production declined to 716 MT (courtesy, Covid). During 2021-22, at 777 MT it exceeded the 2019-20 level but was barely 50 percent of the target.  
Had production come anywhere near the target, the current crisis in the power sector and consequential aggravation of discoms woes could have been avoided. The huge shortfall demonstrates the dire need for better planning and timely execution of projects. Modi also needs to plan for a smoother transition to renewable sources ensuring that conventional source (read: coal) which currently takes a major share of the load doesn’t become an impediment.  
However, the most important thing our political class needs to do is to actually carry out reforms in the power sector at ground zero. This will call for unshackling of discoms from State control, giving them freedom to set tariff for all consumers (HHs/farmers included), allowing private firms in distribution business and vesting infrastructure for transmission, wheeling and last-mile delivery of power in an independent entity which should provide access to it on ‘common carrier’ principle in a transparent and non-discriminatory manner.
If, any State Government wants to give subsidy to farmers and HHs, it should be given directly to the beneficiaries using the direct benefit transfer (DBT) mechanism. 
(The writer is a policy analyst. The views expressed are personal.)

(The writer is a former Chief Secretary, Government of Uttar Pradesh. The views expressed are personal.)