Critically evaluate the Centre–State model of financing intra-state transmission for the energy transition.

Electricity is a Concurrent List subject. State Transmission Utilities build intra-state networks, and the Centre co-finances them through the Green Energy Corridor (GEC). Phase-II gave 33% Central Financial Assistance (CFA) on a ₹12,031.33 crore scheme [1]. Phase-III has an outlay above ₹1.86 lakh crore, and ₹1.36 lakh crore of it goes to intra-state systems [2]. The model is well designed but has repeatedly fallen short in execution.

The financing model

• Phase-I: 20% State equity, 40% National Clean Energy Fund grant, 40% soft loan [3].
• Phase-II: 33% Central grant; States raise the remaining two-thirds [1].

Strengths

• Cooperative federalism: States own and plan the networks, and the Centre shares the capital risk.
• Cheap finance: Germany's €1 billion KfW soft loan lowered borrowing costs [3].
• Targets the real bottleneck: solar and wind make up 37% of installed capacity but only 13% of generation [4]. Phase-II connects about 20 GW of renewables in seven RE-rich States [1].
• Scaling up: Phase-III covers States and UTs and connects up to 135 GW of renewables. It also funds 50 GWh of battery storage to reduce curtailment [2].

Weaknesses

• Execution deficit: by December 2020, Phase-I had built 7,365 of 9,700 ckm of lines and 9,976 of 22,600 MVA of substations. The Standing Committee on Energy blamed weak MNRE monitoring and "lack of priority" [5].
• State fiscal stress: the States' share is ultimately paid for through DISCOMs. They still make losses because tariffs are set below cost and technical and commercial losses are high [4].
• Unclear Central share: Phase-III's CFA ratio has not been reported [2], so States cannot plan their borrowing.
• Weak absorption: MNRE spent 22% less than its 2023-24 budget, and only 58% of targeted transmission lines were added in 2024-25 [4].
• Equity: newly included States with weaker utilities must build large networks at the same time as everyone else.

Overall, shared financing rightly puts transmission at the centre of the energy transition, but the money approved has repeatedly run ahead of the lines actually built. Four steps would turn the outlay into real capacity. Announce Phase-III's Central share early, and link fund releases to physical milestones. Pool concessional loans, and place storage at congestion points alongside the battery storage viability gap funding (VGF) [4]. Together, these would advance SDG 7 and the 450 GW renewable target [1] through genuine cooperative federalism.