New Delhi: In what is likely to be a very controversial proposal with big political and economic ramifications, the power ministry is contemplating ordering all agricultural power connections to have a meter during the 11th Plan, which starts in April.
“During the 11th Plan, all agricultural connections need to be compulsorily metered,” says recommendations of a working group report that has been submitted as input into the preparation of the Five-Year Plan. The working group was set up by the Planning Commission in association with the power ministry.
If the recommendation comes to pass, and it is a big if because of major political sensitivities involving farmers, this radical step is not only likely to have a significant impact on rural power consumption but also on what many see as a looming problem of a rapidly depleting water table in the country.
Much of the power that is consumed for agriculture goes toward irrigation, often for pumping ground water and drawing water from canals and reservoirs. With several state governments, such as Punjab and Tamil Nadu, offering free power as a political subsidy to farmers, there has been mounting concern about unrestricted exploitation of India’s ground water.
Even when power is not free, “the adoption of flat rate pricing for agricultural power is (the) cause for this perverse state of affairs,” the working committee report concluded. “Under this system, a farmer pays a fixed price per horsepower per month for using electricity. Therefore the marginal cost of pumping water is zero. This leads to energy wastage, over-pumping and inefficient selection of crops. Flat rate water pumping also masks the true cost of power to farmers.”
In addition, because “agricultural consumption is mostly unmetered, this allows manipulation of loss by the utilities in the name of agricultural consumption,” the working committee wrote. The report does not talk of any pricing implications from the metering proposal. In a preview of what kind of political battles the proposal would face if it were to head toward reality, several prominent politicians reacted strongly when informed of the agricultural metering idea by Mint.
“No other sector is exposed to the vagaries of weather as much as agriculture,” says former finance minister Yashwant Sinha of the Bharatiya Janata Party.
“That is why agriculture needs to be supported, and is supported, by governments across the world. What is needed is not availability of free power to farmers but, as we did in our time, power at reasonable rates. The government needs to evolve a national consensus on power tariffs to be levied to the farmers. However, if a state government decides to give free power to farmers, it should bear the burden, instead of passing it on to the electricity board or the supplier. So, if compulsory metering means charging the market rate, it can only be opposed.”
The focus on unmetered agricultural connections is coming under additional scrutiny at a time when the power sector needs huge investments—to the tune of Rs10,31,600 crore—during the next Plan period and has ambitious plans to try and cut down on power theft and wastage, a major problem in the country.
Meanwhile, of the total power consumption, agricultural consumption comprises around 20-40%.
Meanwhile, power subsidies to agriculture have soared to Rs27,333 crore, or 68% of all power subsidy, in 2006-07, from Rs5,938 crore in 1991-92. In addition, household and industrial consumers tend to be charged more to subsidize the agricultural power.
Lok Sabha member Basudeb Acharya of the Communist Party of India (Marxist) said that if anything, “Farmers need more, not less subsidy. As it is, agriculture is in crisis because the government is not doing enough.”
Abhishek Singhvi, spokesperson for the ruling Congress party, was more reticent, saying: “Neither should you report nor should I react to internal reports of ministries until a decision has been taken.”