New Delhi, Oct. 31 -- The government is working on a big proposal to relieve state-owned power distribution utilities, which control about 93% of India's consumer supply, of their huge debt burden-provided they privatize their electricity retailing business.

This is one of the most ambitious financial reform initiatives in the power sector in recent history; the annual debt repayment burden of these utilities is around Rs.75,000 crore and rising.

While the offer is compelling, it is also daunting for state governments. A lighter book would make room for meaningful welfare and development work, efforts that can help win elections. Also, private-sector efficiency holds the promise of better quality and reliability of power supply at compe...