Finding that political promises of free power to farmers has led to huge misuse of such electricity, key states have decided to set up separate electricity feeds for farmer and non-farmers.
Andhra Pradesh, Karnataka, Punjab, Haryana, Gujarat and Rajasthan are all taking loans from Central government financial institutions, such as Rural Electrification Corp. (REC), to fund the project, dubbed as the agriculture feeder separation programme. It is expected to collectively cost Rs12,000 crore.
“Each of these state governments have applied for a Rs2,000 crore loan,” said REC chairman A.K. Lakhina. “We are considering their proposals.”
The states have no choice but to go for this expensive project as local politics over water and farmers means they can’t install meters at water pumps in rural areas, even as such soaring subsidies have begun to eat into state government budgets. None of the states is ready to end the free power supply though.
The 2006-07 Economic Survey, published by the finance ministry, estimated the cost of subsidizing free supply of electricity to farmers at Rs27,333 crore.
“The states are now going for an agricultural feeder separation programme as they have realized that it is the only way to measure the (actual) agricultural consumption, which, in turn, will help targeting the power subsidy to the agricultural sector in a better way,” said a senior government official, who didn’t want to be identified.
“We are very hopeful for this scheme. Once we get the money, we believe that this programme will be very successful,” said A.K. Goyal, power secretary, Andhra Pradesh.
Energy losses arising from supply to farmers account for up to 25% of total losses of supplying electricity in these states.
Because agricultural supply of power is unmetered, most utilities write off all the losses due to transmission and distribution as agricultural consumption. Once the feeds are separated, power utilities will no longer be able to mask their transmission and distribution losses, including pilferage.
Predicts Shubhranshu Patnaik of audit firm PricewaterhouseCoopers: “This measure will help in getting a sense of how much agricultural consumption is needed, control losses, accurately target subsidy and also help in improving energy efficiency.”
But not everyone is happy.
Says Gurudas Dasgupta, a leader of the Communist Party of India: “While the government is happy giving sops to exporters due to the appreciation of rupee, I do not understand why are they against giving subsidies to the farmers. The agriculture sector is already in decline and if the subsidy in any form is reduced, it will further affect the sector.”
Other political parties, especially in states where such free power has also led to depletion of groundwater, seem to be embracing the move.
Says Prakash Javdekar, the national spokesperson for the Bharatiya Janata Party, which is in a coalition government with the Akali Dal in Punjab, a state that provides free power to farmers: “A feeder separation is a must to know where is the power going as we have seen that free power leads to misuse.”