,India

Red tape hampers $12b aid to India's power retailers

The delay is blamed to a requirement that the state governments underwrite the loans.

Two months after India announced a $12b (INR900b) loan program to aid power distributors punished by the pandemic, only a fraction has been utilized as many state applications have yet to meet the lending requirements, according to people familiar with the matter.

The loans, announced by Finance Minister Nirmala Sitharaman, are amongst a raft of measures aimed at reviving an economy that is projected to contract this fiscal year for the first time in more than four decades.

For states to receive the funds, they must lay out their plans to turn around their electricity distributors, a regular requirement for most efforts by the central government to help the state-managed power industry.

That includes providing a timeline for the payment of subsidies that states owe power distributors, as well as the unpaid power bills of state government units. The delay is partly due to a new requirement that the state governments underwrite the loans.

Read more from Bloomberg.

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