DBT-E would kill discoms' perverse incentives, says Prabhat Barnwal

Prabhat Barnwal, co-author of a study on discom finances, speaks to Subhomoy Bhattacharjee

Prabhat Barnwal, Assistant Professor of Economics, Michigan State University and co-author of a study on discom finances, speaks to Subhomoy Bhattacharjee
.
Why have discoms’ operational revenues not risen as a percentage of their total revenue for the past two decades?

The core reason is they have little incentive for loss reduction. There is an agency problem in the sense that it is the state government or the Centre that pays for investments, working capital and operating losses. The discoms, therefore, make wasteful investment decisions and under-invest in revenue collection.
 

 The second challenge is commitment. The Centre has repeatedly set