Srinivasan dwelt at length on the need for a single market for the vital service of electricity also. “For several countries, especially developed ones, energy contributes to 10 per cent of GDP. It is 20 per cent for China. For India, it is around 5-6 per cent. However, for this sizeable contribution, electricity is not allowed free trade. With plans to make power available for all and with per capita consumption increasing, over time, energy will contribute 10-12 per cent to GDP. We need to open this sector to free trade. This requires dismantling the barriers and providing incentives and alternatives for current stakeholders to give up their monopoly position,” said Srinivasan.
It will expand the frontiers of GST...
This business leader, who has pioneered venture capital in the south, believes firmly that such opening up of the power sector will help expand the frontiers of GST. “Today, services, digital data, money… are moving freely. With GST this will get accelerated. Why not electricity included for similar free trade? Hefty import duties by states and state monopolies continue. Imagine you are compelled to go to the P&T department to get a cell phone connection! How miserable life would be! Would we have had the enormous expansion of telecom we experience today?
“It should be the same for electricity as well. Today India has surplus power. At least we do not experience widespread shortages. It is time we think of this opening as well.
“States charge Rs 1.50 per kwh as import duty. This is over tariffs that are in the region of Rs 4 to Rs 5 per kwh. This duty works out to over 30 per cent. With GST there can be a 15 per cent tax. Should we have a 30 per cent duty on essential electricity?” asked Srinivasan.
The business leader commends removing the state monopoly for transmission and distribution: ”this means multiple people can take the transmission highways on tariffs fixed by the Electricity Regulatory Commission. It is a good move, but one has to wait and see how it is implemented,” said Srinivasan.
Amending the CEA bill...
The amendment of the Central Electricity Authority Act is before the Rajya Sabha. “The states are vehemently opposing this on the ground that electricity is in the concurrent list. I think it is a valid argument,” he said.
Srinivasan also feels the need to end the monopoly of power supply. He suggests that there should be competition in generation, transmission and distribution: “You can have company X drawing a wire to your house; company Y pulling a cable from a distant part of Tamil Nadu to Chennai; company Z coming to you and saying that it would supply power at this rate. Such competition can improve efficiency and will be to the benefit of the consumer.
“As mentioned by RBI Governor Raghuram Rajan, information, technology and incentives are the three barriers to financial inclusion. Enlightened states will have to deal with the incentives issue,” he said.
Srinivasan was CEO of TVS Electronics. I remember the sturdy and reliable printers produced in volumes at TVSE. I also remember the close cooperation he forged between industries in Taiwan and Tamil Nadu. As regional chairman of CII, he made rich ontributions to the success of the annual CII Connect meets when information, communications and telecom units rushed to Sriperumbudur.
A MBA from the Graduate School of Business, University of Michigan, Srinivasan is actively involved in nurturing entrepreneurship and management education. He has been focusing on venture capital. TVS Capital Funds Ltd has managed two funds, raised around Rs 1100 crore and invested these in around 15 ventures. Srinivasan said these funds have been doing well. His company plans the third fund towards the end of the year to raise around Rs 800-1000 crore.