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Why Jharkhand has exited an agreement with Centre, RBI on power dues?

Topics Covered: Infrastructure- Energy.

Why Jharkhand has exited an agreement with Centre, RBI on power dues?


Context:

Jharkhand exited from a Tripartite Agreement (TPA) between the state, Government of India (GOI) and the Reserve Bank of India (RBI).

What is the Tripartite Agreement?

An agreement was signed between GOI, Jharkhand state and RBI in 2017 stating that the state government shall ensure that the state power utilities make the supply payment due to the Central Public Sector Units in this case, Damodar Valley Corporation (DVC) within the period specified in the supply agreement.

  1. In the event of State Power Utilities committing a breach in the terms, the state government shall independently and as a principal debtor become liable for the payment.
  2. As per the TPA, it authorises the GOI to instruct RBI to act promptly on its instructions i.e. to debit the amount.
  3. As per the tripartite agreement, the Centre has the power to auto-debit the dues of a state to central power discoms from the state’s RBI account.

 What is Jharkhand’s say?

  • The cabinet decided to pull out of the agreement as it is not in the best interest of the state.
  • It says, the Centre’s decisions like these affect the federal structure of the country.

Sources: Indian Express.