Rationalise power subsidy in Punjab: Montek panel

Ruchika M Khanna

Tribune News Service

Chandigarh, July 27

The final report of Montek Singh Ahluwalia-led expert group on “Medium and Long Term Post-Covid Economic Strategy for Punjab” may not find many takers in the echelons of power as it recommends “politically uncomfortable” decisions in the power and agriculture sectors.

Constituted by the state government, the group recommends rationalising power subsidy, as it is an “unsustainable fiscal practice, which will harm future generations and cannot continue indefinitely”.

Punjab’s power subsidy bill has been rising and at Rs 10,668 crore is now over 11 per cent of its revenue receipts. This recommendation was also made in the group’s interim report submitted last year and Chief Minister Capt Amarinder Singh had then said the power subsidy would stay.

It also recommends shutting down two thermal plants that produce power at much higher cost and Punjab State Power Corporation Limited (PSPCL) must plan in advance how to recover best price for assets and ensure smooth transition to other sources of power, after the Bathinda plant has already been shut.

The recommendations have come at a time when the government is going all out to woo farmers and any decision to rationalise power subsidy can “politically hurt” the Congress. The government is also under pressure to scrap the controversial Power Purchase Agreements (PPAs) made by the previous Akali-BJP government with the independent power producers. With the group recommending shutting down of thermal plants, scrapping PPAs would threaten the energy security of the state.

The report, a copy of which is with The Tribune, also raises questions over the government’s claim of Rs 5 per unit power tariff to industry, saying effective tariff is much higher and the industry is reeling under rampant and unscheduled cuts. “Stop burdening the industry with subsidy of certain other groups of consumers. Subsidy should be borne transparently in the budget. Loading it on the industry or commercial sector has the consequence of reducing competitiveness of Punjab’s industry,” says the report.

The recommendations made by the group in its interim report last year for the agriculture sector had hinted at bringing in corporatisation by recommending creation of a framework that allows land to be leased for 15-20 years for plantation and orchards, 5-10 years for other agriculture purposes on renewable terms. The final report now says they have not received any feedback from the government “as processing of recommendations will have to wait for the outcome of farmers’ protests”.

The report says the recommendations, if implemented, would help the state reach its pre-eminent position and Punjab needs to grow at 8 per cent every year for revival of the state economy in the post-Covid-19 scenario.

Other important recommendations

Healthcare

• Increase budget allocation by 20% for next five years
• Create integrated healthcare model by fast-track establishment of wellness centres in rural areas
• Enable urban local bodies to strengthen urban primary health and clinical care
• Set up labs and diagnostic services at block level
• Strengthen referral system by establishing links with medical colleges and other tertiary referral centres
• Increase use of telemedicine and strengthen frontline healthcare staff

Industry

• Amnesty scheme by PSIEC to cover all pending land cost enhancement cases
• Set up Punjab enterprise promotion panel
• Reforms in PSIEC by de-centralising some powers
• Offer one-time settlement scheme to settle all old dues
• Reform Punjab Bureau of Investment Promotion
• Tag each khasra clarifying restrictions and permissions needed before putting land to industrial use
• Set up more industrial estates on outskirts
• Have a re-look at labour laws

Social Sector Reforms

• Include migrants in social sector initiatives
• Set up mechanism to monitor access of these schemes by migrants
• Extend benefits of labour laws to migrant workers
• Devise housing solution for them, ensure health centres, schools, anganwadi centres in districts with high migrant population

Digitisation

• Involve private industries in skill development
• Improve training outcomes
• Launch a skills university

Pay govt employees on par with central staff

• Reduce power subsidy bill
• Even though the Pay Commission report is submitted, bring pay scales of government employees on a par with those of central government
• Do not raise additional contingents of police as population: police ratio is high
• Make parcels of vacant land available and auction these to raise resources
• Increase taxes, duties on alcohol and royalties on minor mineral mining