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The poor finances of India's State Electricity Boards (SEBs) will become "a major drag on the economy," according to an annual report completed by the national Planning Commission. It says that electricity shortages will be higher in 1996-97 than originally assessed under India's 8th Plan for the economy. Planned capacity additions of over 30,500 MW between 1992-97 would have prevented an increase in India's generating deficit, but only about half this amount of new power plant has been installed. Only four SEBs had a positive return on capital (with subsidy) in 1994-95 -- Haryana, Orissa, Karnataka and Maharashtra. It is estimated there will only be three this year -- Karnataka, Maharashtra and Orissa. The average cost to the SEBs of supplying electricity is estimated at INR 1.70/kWh, yet the average charge is just INR 1.40 kWh. The SEBs will have to raise their prices by about INR 0.27 to break even, says the report.

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