It is normal for states to ask for aid when the country is facing a drought-like situation. Usually, the Union government provides financial help to states, and they, in turn, distribute money to farmers and other affected groups.
This time, however, states such as Punjab and Haryana have demanded cheap diesel and power to help their farmers tide the crisis. As reported in Business Standard on Sunday, the Union finance ministry is considering this option.
It should not.
No government should interfere in product-pricing decisions. As it is, diesel is priced cheap in India. There is no ground for further distortion.
Then, in case a drought is declared, it is best to give a lump sum of aid to the affected states and let them make the decision on how to spend the money. Drought or no drought, it is important that state governments face, and learn to respect, a hard budget constraint.