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Impact of corporate governance norms on the performance of Indian utilities

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  • Srivastava, Govind
  • Kathuria, Vinish

Abstract

This paper investigates the role of corporate governance (CG) on the financial and operational (technical-cum-commercial) performance of India utilities. The Indian power sector, in the past, was mainly driven by electoral and political considerations that led to an unsustainable level of performance. The Indian Electricity Act 2003, brought a common framework of reforms at the national level. After more than fifteen years of reforms, results at the distribution end are still mixed. We argue that the ‘external causes' unleashed from the reform process should be a catalyst to more significant internal management changes. To quantify these changes, we compute the CG index and then employ data of 48 power utilities from 19 Indian states for the year 2016-17 to see the impact of this index on their performance. We find a positive relationship between the CG index and the performance of the utilities. An important policy implication is that improvement in CG is worth pursuing even in utilities where arm's length between government and the utility is not possible, as the government is the owner of these utilities.

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  • Srivastava, Govind & Kathuria, Vinish, 2020. "Impact of corporate governance norms on the performance of Indian utilities," Energy Policy, Elsevier, vol. 140(C).
    • Handle: RePEc:eee:enepol:v:140:y:2020:i:c:s0301421520301671
    DOI: 10.1016/j.enpol.2020.111414
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    3. Dr. Nandkishor N. Dhondge, 2023. "Application of corporate governance measures in Indian small and medium enterprises: A way forward," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 14(2), pages 14-21, May.
    4. Afia Malik, 2021. "Corporate Governance in the State-Owned Electricity Distribution Companies," PIDE Knowledge Brief 2021:40, Pakistan Institute of Development Economics.
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    More about this item

    Keywords

    Reforms; Privatization; Price-cost margin; AT&C losses; Corporate governance;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

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