Graphic: Naveen Kumar Saini/Mint
Graphic: Naveen Kumar Saini/Mint

Who pays for agriculture-use electricity?

Agricultural consumers used about 23% of total energy sold in 2012-13, the latest year for which data is available, but contributed to only 8% of revenue

Reports indicate that the Rajasthan State Electricity Board wants to restructure debt worth 55,000 crore. State electricity board finances are in a dire shape not only because of inadequate tariffs, but also because they don’t charge all classes of consumers adequately, like in the case of un-metered power supply to farms. Agricultural consumers used about 23% of total energy sold in 2012-13, the latest year for which data is available, but contributed to only 8% of revenue.

There is rampant cross-subsidy across states in this regard and Rajasthan is a key offender. In many large states, the industrial sector’s contribution to revenue is much higher than its share of volumes. The situation is just the opposite in agriculture. In major farming states such as Haryana, the share of this sector’s contribution to revenue is a tenth its share of volume. Even in Gujarat, which has instituted some reforms, agriculture consumers are cross-subsidized. Commercial losses will reduce only if these cross-subsidies are eliminated, which will then relieve stress on the balance sheets of state electricity utilities.

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