Free power to agriculture consumers more than doubles in four years | chandigarh | Hindustan Times
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Free power to agriculture consumers more than doubles in four years

chandigarh Updated: Jan 05, 2014 20:27 IST
Gurpreet Singh Nibber
Gurpreet Singh Nibber
Hindustan Times
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The burden of the Punjab government's populist measure of free power to the agriculture sector has more than doubled during the past four years. From an annual expenditure of Rs 2,337 crore in 2010-11, an expenditure of Rs 5,037 crore has been proposed for 2014-15. It has been an increase of 116%.


As per the expenditure proposed in the annual revenue requirement (ARR) petition filed by the Punjab State Power Corporation Limited (PSPCL) before Punjab State Electricity Regulatory Commission (PSERC), the state government will have to shell out Rs 13.8 crore every day to run 11.5 lakh agriculture tubewells in the state in the financial year 2014-15. The per-day expenditure on free power to the agriculture sector four years ago was just half -- Rs 6.4 crore.

The regime of unbundling of state power boards into smaller entities mandates cutting down free power and clubbing losses, but since the erstwhile Punjab State Electricity Board was unbundled into two entities - PSPCL and Punjab State Transmission Corporation Limited (PSTCL) on April 16, 2010, the expenditure of free power is fast escalating each year.

The subsidy bill of agriculture pumpset consumers was Rs 2,337 crore during 2010-11 when the PSEB was unbundled. It jumped by more than Rs 1,000 crore in 2011-12 to reach Rs 3,750 crore and increased by Rs 856 crore in 2012-13 to take the total to Rs 4,606 crore. The AP subsidy claimed by the PSPCL is likely to touch Rs 4,728 crore in the current financial year 2013-14 and Rs 5,037 crore in 2014-15 as projected in the ARR filed a fortnight ago.

The free power to other consumer sections, including residential supply for the scheduled caste consumers and below poverty line consumers, has also seen a quantum jump. From Rs 269 crore in 2010-11, it is likely to touch Rs 944 crore during 2014-15.

The PSERC had conducted an audit of agriculture pumpset consumption claimed by the PSPCL and concluded that to bring down its transmission and distribution losses, the PSPCL fudged the figures and showed 1 to 2% losses as AP consumption. According to sources in the PSPCL, during the period 2010-15, about Rs 1,000 crore has been claimed as extra subsidy and if the PSERC cuts this amount from the ARR filed by the PSPCL, the gap claimed by the PSPCL would reduce from Rs 2,600 crore to Rs 1,600 crore. This will need a tariff rise of about 40 paise per unit as against 63 paise per unit requested by the PSPCL in its tariff petition.

'Policy a political stunt'

Economist Sardara Singh Johl said the policy of free power to agriculture pumpsets in practice for the past 17 years is adding to losses of the state government and the PSPCL and also not benefiting the farmers.

"As the government is giving free power to farmers, the Commission for Agriculture Cost and Prices, while calculating the MSP on foodgrains, doesn't take the expenditure on running agriculture tubewells into consideration," he said, adding that the benefit is passed on to the consumers of 20 million tonne foodgrains produced, who live outside Punjab.

"I am not against subsidy to the farm sector, but it should be passed on in cash. I have tried to make the Punjab government understand, but they continue with this political stunt," he said.

He also pointed out that tariff levied on tubewells was less than other consumer sections and in case tubewells were treated on par with other consumer sections, the subsidy bill would cross Rs 7,000 crore annually.