Question

what is meant by State Electricity boards is not able to recover the difference between the actual price of Power and subsidised price thus suffer losses and if there will be no subsidy given then according to you there will be no loss?explain it or by giving example?

Answer 1

Let us assume that the cost of producing 1 unit of electricity is Rs 100. And, the subsidised price offered by government is Rs 60. Now, this implies that government is incurring a loss of Rs 40 ( i.e 100 - 60) by selling each unit of electricity.

If the government will provide electricity without subsidy, then it will sell electricity at a price of Rs 100 per unit. This means there will be no loss to the government in such a scenario.