Mid-Day Opinion: Maharashtra govt’s power play

The Maharashtra governmentrsquos decision to waive nearly Rs 48000 crore in unpaid electricity bills has been welcomed by farmers across the state For many farming families it comes as a huge relief Agriculture has become an expensive business The cost of seeds fertilisers labour and irrigation has gone up while income still depends on rainfall and market prices Many farmers have simply been unable to pay their electricity billsFew would question the need to support farmers But this waiver may be doing more than that It could also be a smart financial decision that strengthens the statersquos power distribution company If that is the case the government deserves credit for solving two problems with one moveThe timing is significant The government has already announced plans to list the statersquos power company on the stock market Before investing buyers first examine a companyrsquos financial health They look at its profits outstanding dues and overall balance sheet A company carrying nearly Rs 48000 crore in unpaid electricity bills does not inspire confidence Such arrears weaken the balance sheet reduce investor confidence and can lower the companyrsquos valuation By clearing these old dues the government is not only helping farmers but also improving the companyrsquos financial position before it enters the capital market From a business point of view this makes complete senseThere is nothing unusual about this Governments across the world clean up the finances of public sector companies before listing them or bringing in private investment They reduce liabilities strengthen balance sheets and make companies more attractive to investors A financially healthier company usually receives a better valuationIf Maharashtra is following the same path it should be seen as smart financial planning not something to hideIf helping farmers and preparing the power company for listing are both objectives the government should simply say so There is nothing wrong with one decision serving two purposes In fact that is smart policymaking Transparency will only strengthen public confidenceThere are however some important questions The waiver does not make Rs 48000 crore disappear In the end it is usually the taxpayer who bears the cost The government must also think about the thousands of farmers and households who have continued paying their electricity bills honestly despite financial hardship They should not feel they are being punished for doing the right thing If waivers become too frequent people may begin to believe there is little reason to pay on time because another relief package will eventually arrive That weakens payment discipline and creates the same problem all over againThis is why the waiver should be treated as a onetime cleanup not a permanent solutionIf the power company is serious about entering the stock market it must also improve the way it operates Better billing timely collections modern technology and stricter financial discipline will matter far more than one waiver Investors do not look only at todayrsquos balance sheet They also want confidence that the company will not return to the same position a few years later That will be the real measure of successHelping farmers and making the statersquos power company financially stronger are not conflicting goals If one decision achieves both it deserves to be seen as smart policymakingThe only mistake the government should avoid is telling only half the story People are mature enough to understand that one policy can serve more than one purpose There is nothing wrong if a farmer welfare scheme also strengthens a public sector company before its market listingGood governance is not just about announcing relief packages It is about taking decisions that solve multiple problems and being honest about why those decisions are taken If this electricity waiver helps farmers today while preparing the power company for a stronger future it could prove to be one of the smartest financial decisions taken by the Maharashtra government in recent yearsSanjeev Shivadekar is political editor midday He tweets SanjeevShivadekSend your feedback to mailbagmiddaycomThe views expressed in this column are the individualrsquos and donrsquot represent those of the paper