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BW Businessworld

Poor Acts

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The Delhi Government's decision to invest equity worth Rs 500 crore in Reliance ADAG's BSES Rajdhani and BSES Yamuna (provided the Reliance Group also brings in equal equity) sets a bad precedent. Now the Tatas also want a similar equity infusion.

After privatising the distribution of power in Delhi, the government has no business in putting in more money in the loss-making companies that handle distribution; the step does not in any way solve the long-term problems of the sector in the state.

The two BSES companies have held that they are making losses due to low tariffs, which has led them to defer payment to the power generating firms from whom they buy electricity.

If that argument is true, the tariffs need to be revised.

On the other hand, if the BSES companies are in a financial mess due to inefficiency, nothing needs to be done to help them. It is, after all, not the government's job to help private companies that cannot run their businesses properly. By putting in equity, the Delhi government is essentially using the tax payer's money — and using it inefficiently.

Sure, the government needs to act urgently to make sure that consumers in Delhi do not suffer from a power crisis. But putting money in the form of equity in the BSES companies is not the correct step.

STRICTLY BUSINESS

How to make Delhi a better place to live and work? Chief minister Sheila Dikshit has an idea — make the National Capital Region a common economic zone. Her logic: it will ensure uniform development of satellite towns, and de-congest the capital city.

(This story was published in Businessworld Issue Dated 09-01-2012)