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The IUP Journal of Applied Economics
Power Sector Regulatory Governance in Orissa
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An effective institutional framework is essential to sustain growth in output, efficiency and capacity of the utility service sectors. The regulatory agency is intended to provide the `high quality institution' , which permits and fosters sustained growth in capacity and efficiency in utility service industries. While analyzing sustained economic growth of any state, the supportive role extended by these institutions should be taken into account. The present paper provides an assessment of the effects of privatization and regulation on the power sector of Orissa, India.

 
 

Over the last two decades, a great deal of attention has been given to the role of institutions in economic growth. Good institutions embody a heritage of past good policy decisions and themselves generate a flow of superior policy decisions that support sustained investment and production growth (Rodrik et al., 2002). It has been argued that to ensure sustained growth and convergence with the living standards of advanced countries, the acquisition of high quality institutions is the prerequisite. These arguments apply with extra force to infrastructure industries, i.e., the utility service industries. An effective institutional framework is essential to sustain growth in output, efficiency and capacity of the utility service sector such as electricity, telecommunications and water. The standard solution is to introduce an independent regulatory agency, within a clearly defined legal framework. The regulatory agency would engender sustained growth in capacity and efficiency in utility service industries.

In the last 20 years, the power sector has been subject to restructuring. Despite the challenges of high capital costs, political interference, network monopoly effects, daunting regulatory tasks, reformers have found ways to introduce market forces. In the early 1980s, new ideas have been advanced and economists have recognized that some aspects of electric power systems are not natural monopolies and could be made more efficient through market competition (Joskow and Schmalensee, 1983).

 
 
 

Applied Economics Journal, Power Sector Regulatory Governance, Production Growth, Regulatory Agencies, Electric Power Systems, Economic Growth, Foreign Direct Investment, FDIs, Orissa Hydro Power Corporation, OHPC, Orissa Power Generation Corporation, OPGC, National Thermal Power Corporation, NTPC.