10% of Punjab’s budget goes into power subsidy | punjab | top | Hindustan Times
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10% of Punjab’s budget goes into power subsidy

The power regulator has pegged the subsidy bill at Rs 13,718 crore. Of this, Rs 8,949 crore is subsidy for 2018-19, with the remaining being the arrears of non-payment of subsidy over the past three years.

punjab Updated: Apr 23, 2018 21:41 IST
Vishal Rambani
(Representative Image)

The Punjab government’s entire allocation to power sector will be spent on supply of free electricity. What’s even more significant is that this forms 10% of the total budget expenditure of the state government of Rs 1.28 lakh crore.

The power regulator has pegged the subsidy bill at Rs 13,718 crore. Of this, Rs 8,949 crore is subsidy for 2018-19, with the remaining being the arrears of non-payment of subsidy over the past three years. Recently, the Centre for Research in Rural and Industrial Development (CRRID) found that 81.5% of free power goes to big farmers. Only 18% of beneficiaries comprise small (2.5 to 5 acres) and marginal (less than 2.5 acres) cultivators.

Punjab government’s appeal to farmers to give up power subsidy has seen no response.

Before free power to farming, subsidy was Rs 1,650 cr

In 2001-02, when free power was extended to the farming sector, the subsidy bill amounted to Rs 1,659 crore. In 2010-11, it reached Rs 3,095 crore and since then it has become almost four times. The government has defaulted on paying this for the past three years. With Rs 8,000 crore subsidy dole-out this year and pending payments, the outstanding is at Rs 13,718 crore. The Punjab State Power Corporation Limited already has a loan of Rs 30,000 crore.

Sections that benefit from the subsidy

Out the Rs 8,949 crore subsidy for this year, Rs 6,256 crore goes to free power for farmers; Rs 1,108 crore to Scheduled Castes, Rs 69 crore to non-SC Below Poverty Line (BPL) families; Rs 75 crore for Backward Classes; Rs 1,441 crore for industry that is getting supply at Rs 5 per unit. The arrears are Rs 4,769 crore. Under rules, the subsidy amount is to be paid in 12 monthly instalments of Rs 1,143 crore, in advance.

Regulator has imposed penal interest

With the Punjab government failing to pay the monthly instalment so far, the regulator has imposed 9.36% interest on delayed payment. The PSPCL is surviving by taking loan when the state defaults. “Punjab has been trapped in a vicious cycle. Freebies are equated with political benefits; and this dangerous trend. The state has become victim to politics of freebies,” said an IAS officer, requesting anonymity.

“Subsidy is needed, when you undertake strategic work. In Punjab, they are used to garner votes. Giving subsidy to industry is suicidal. Punjab should debate and rationalise subsidies,” said economist Lakhwinder Singh Gill.