Another power shocker

POWER tariff hike has become par for the course in Punjab, unless elections are around the corner. In May-end this year, the hike had been announced barely a week after the Lok Sabha polls. With the next Assembly elections over two years away, the state government has conveniently decided to make domestic as well as industrial consumers pay even more in 2020. According to the state power regulator, additional revenue requirement of Rs 1,320 crore on account of coal washing charges to be paid to Rajpura Thermal Power Plant and Talwandi Sabo Power Project would be recovered from consumers over the next 12 months. Punjab State Power Corporation Limited (PSPCL) has been bearing the brunt of successive governments’ populist commitment of providing free power to farmers, a key vote bank no political party wants to displease. Biting off more than it can chew, the government now owes power subsidy dues to the tune of over Rs 5,000 crore to the PSPCL.

Earlier this year, the Punjab and Haryana High Court had questioned the Punjab and Haryana governments on free or subsidised power to rich farmers. The Chief Justice had observed that subsidy should be only for the needy, but its burden inevitably fell on the taxpayers. Most of the affluent farmers, which include some influential politicians, have only paid lip service to giving up subsidy on their own.

Noted agri-economists have been repeatedly highlighting the need to rationalise subsidy. The Niti Aayog suggested that pan-India agriculture subsidies amounting to over Rs 2 lakh crore annually — including fertilisers, electricity, crop insurance and irrigation — be replaced by income transfer. Telangana and Odisha have adopted this model, resisting the band-aid measure of waiving farmers’ loans. Last year, the Punjab government had launched a pilot project on direct benefit transfer for electricity in the agriculture sector, in a bid to reduce the subsidy bill, but the scheme came a cropper amid stiff resistance from farm unions. Eventually, it all boils down to political and administrative will. Robbing Peter to pay Paul is nothing but a sure-fire recipe for perennial fiscal mess.