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Posted on Dec 18, 10:05PM | IBNS
Expressing grave concerns over steep rise of about 50 per cent in power tariff effective from October 1, apex industry body ASSOCHAM urged the government of Uttar Pradesh (UP) to reconsider its decision which is severely hurting the margins of small and medium sector companies.
"The severe hike in electricity tariff has lead to a sharp rise in the cost of production for the MSME sector as they do not have wherewithal to set up their own turbine for captive power generation," said The Associated Chambers of Commerce and Industry of India (ASSOCHAM) in a communication to the UP chief minister Akhilesh Yadav.
In the HV2 category the rate of electricity hike was about 48.5 per cent as of October in Uttar Pradesh. While the rate hike in other leading states of Andhra Pradesh, Gujarat, Haryana, Maharashtra, Punjab and Rajasthan in different categories of HT33, HT, HT industry, HT (all categories above 1,000 units), HT and HT2 ranged between about 8-34 per cent.
State Category Month of Tariff Rate of Hike
Hike in 2012
Uttar Pradesh HV2 October 2012 48.9pc
Haryana HT industry January 2012 14.2pc
Rajasthan HT 2 January 2012 15.0pc
Punjab HT - 8.08pc
Gujarat HT January 2012 15.8pc
Maharashtra HT-all categories
above 1,000 unit August 2012 25pc
Andhra Pradesh HT33 January 2012 34.5pc
ASSOCHAM said it is concerned that this move of the UP government is bound to make the goods manufactured in UP SMEs less competitive in comparison to their counterparts.
ASSOCHAM said it will soon mount a high level delegation to meet the chief minister and apprise him of the industry's concerns.
"This is a substantial rise in power tariff especially while looking at the track record of the UP government which has hiked the electricity tariff by about 5-10 per cent year-on-year (YoY) during the course of last 10 years and might give a huge setback to the state government's efforts to woo investments," said D.S. Rawat, national secretary general of ASSOCHAM.
"This would hurt small and medium enterprises in the sectors like - dairy, handloom, handicrafts and others thereby hampering the pace of economic development in UP which has started gaining momentum," said Rawat.
"MSMEs play an important role in the development and growth of the state and such high electricity tariff would either lead to the closure of industries or prevent them from expansion."
According to a recent state-wise ASSOCHAM analysis of number of SMEs assisted, margin money utilized and estimated employment generation, over 30,000 jobs were generated in the small and medium enterprises (SMEs) sector in Uttar Pradesh (UP) between April 2011 and up to February 15, 2012 and the state emerged as the third leading state to facilitate growth in the SMEs sector.
Utilising the margin money subsidy worth over Rs 107 crore, the state of UP assisted about 3,205 SME units across UP during the aforesaid period.
West Bengal has emerged as a front-runner state by generating over 43,000 job opportunities and assisted about 5,290 SME units utilizing about Rs 52.49 crore of the margin money subsidy, highlights the ASSOCHAM study.
While, Andhra Pradesh emerged the second leading state by generating about 33,115 job opportunities and assisted about 1,459 SME units utilizing about Rs 48.9 crore of the margin money subsidy.
"Over 3.25 lakh jobs were generated in the SME sector by providing assistance to a total of 35,607 SME units across India utilizing margin money subsidy worth about Rs 700 crore during the 11 months period between April 2011 and February 15, 2012," according to ASSOCHAM.