Electricity consumption is one of the most telling indicators to assess a nation’s economic development. A financially robust and vibrant electricity sector is pivotal for economic growth and is considered vital for a nation’s overall development.
Tamil Nadu is one of the states with free electricity for agriculture and electricity tariffs for several other consumer categories such as domestic, huts, etc., are subsidised by the Government of Tamil Nadu. In addition to the electricity subsidy provided by the Government, the state owned electricity utility, TANGEDCO, cross-subsidises the lower consumer tariffs from higher tariffs revenue. However even with the combination of Government of Tamil Nadu subsidies and cross-subsidies, revenue is significantly lower than costs. In 2015-16 TANGEDCO’s cumulative revenue gap was INR 30,884.15 Crore. This paper presents an analysis of the impact of Tamil Nadu’s electricity policies on the financial performance of TANGEDCO.