The Allahabad High Court has denied interim relief to power companies, which had challenged the Reserve Bank of India's 12th February circular on bad loans.
To analyse the impact of the court's decision on the power sector, CNBC-TV18 spoke with PV Ramesh, chairman and managing director of Rural Electrification Corporation Limited.
He said one must realize that the power sector is much bigger than the stressed assets.
“We have an installed a generation capacity of 344 gigawatt today and there is also rapid addition of renewable energy and 60000 megawatt of power assets are at various stages of stress," Ramesh told CNBC-TV18 on Tuesday.
He clarified that REC being a non-banking financial institution though exclusive in the power sector, the February 12 RBI circular does not directly apply to them. However, as a measure of prudence they have applied the same norms.
Ramesh is confident that with the level of investment made by the government through various schemes and interventions, all the infrastructure bottlenecks that existed for several decades in transmission, distribution space would be evened out and the demand would pick up substantially in the short-term, which would naturally address a number of issues.
"It will also improve the market not just for power but also for the power generating plants that are under stress," he added.