a consequence, the power subsidy burden which was around
Rs 1500 crore per annum, will rise to about Rs 3000 crore
during fiscal 2004-05. While waiver of dues is a one-time
burden, the loss of power tariff will be a recurrent burden
on the exchequer every year. Tamil Nadu government too promptly
reversed its earlier policy, and reverted back to free agricultural
power. This could well set a trend in other States.
disingenuous argument of AP government is that the burden
on account of free power is only of the order of Rs 400
crore per annum, and that should be cheerfully borne by
the exchequer to alleviate the distress in farm sector.
Viewed purely from the context of realization of revenues
from agricultural sector in the state, this is a technically
correct statement. But this is a gross distortion of the
complex crisis affecting the farm sector. Agricultural power
is already heavily subsidized on account of the uneconomically
low tariff at fixed slab rate based on connected load. The
exact subsidy amount on account of agriculture is disputed,
because there is no accurate and reliable measurement of
any case, causes of rural distress are unrelated to agricultural
power tariffs. Problems of productivity, markets and value
addition are unaddressed. Huge bribes are extorted for giving
power connections to agricultural pumpsets, and often these
bribe amounts equal ten years' tariff payments at the slab
rates in vogue until recently. Even as such venal corruption
continues, marginal tariffs are claimed to cause distress!
more importantly, very low fixed tariffs at slab rates based
on connected load encouraged indiscriminate exploitation
of ground water. Water levels are falling precipitously
in dry lands. The benefits of free power go only to the
few farmers who can invest huge sums in sinking borewells,
and are lucky to strike water. Enticed by nominal tariffs,
many small farmers borrowed at usurious rates and drilled
several unsuccessful borewells. This indebtedness for indiscriminate
drilling lies behind several farmers' suicides. As agricultural
power was not metered even earlier, the few lucky farmers
raise water-intensive crops in rain-shadow zones, further
depleting ground water. On top of it, there is no incentive
for efficient use of energy as a fixed slab rate was charged
per HP of connected load earlier, and power is free now.
Consequently, inefficient or high capacity motors are installed,
sometimes in the hope that a larger pumpset will yield more
water. The limited water available is wastefully used, and
sometimes motors run idly as ground water recharging is
slower than drawal of water. The consequences of unmetered
power have clearly been horrendous to the economy, water
table, and environment.
there a way out? The free power policy cannot be reversed
easily for the time being. Even the Prime Minister was forced
by political compulsions to reluctantly endorse such a policy.
Can we convert this challenge into an opportunity and address
the real crisis afflicting the rural power sector?
radical reorientation is required in our approach to agricultural
power. We must recognize that farm sector does need support
for sound economic and political reasons. Therefore the
policy should not be to recover economic power tariffs from
agricultural sector. We need to redefine our objectives
- energy and water conservation, and proper energy auditing.
In order to achieve these, we need metered power supply.
If free power is inevitable, there must be a reasonable
ceiling of say, 3000 units per annum for such freebies,
and a modest, but progressively increasing tariff should
be charged once consumption crosses that limit. The utilities
can install meters at their own cost. Once there is incentive
for energy conservation, farmers will install efficient,
low-HP motors, and use energy saving devices.
the benefits of free or concessional power should be limited
only to dry crops. This is easy to monitor, as the crop
raised is physically verifiable. Cropping area will increase
with the same amount of water. Encouragement of dry crops,
coupled with graded tariffs will significantly reduce agricultural
power consumption. Therein lies the real benefit to utilities:
that energy saved can be redirected to other consumers who
pay higher tariffs.
of power leads to another great benefit. There will be better
energy auditing. Right now, in many states, we have no clue
about power losses. In AP, for instance, all we know is
that some 46% of the power is metered and billed. The rest
is consumed by agriculture, or stolen because of collusive
corruption (euphemistically called 'commercial losses')
or lost because of poor distribution infrastructure. Nobody
really knows what is happening where. While we have a global
picture of power sector deficits, what we need is precise
energy auditing at the local level to address the problems
systematically. Metering localizes problems, and enables
us to reduce losses.
power, whether free or not, is a disaster in every sense
- lowering of water table, high energy consumption, absence
of energy audit, monumental corruption, and paralysis of
action on distribution front. Free, or concessional power
can yet be used as an incentive to meter power, save energy,
conserve water, ensure better energy auditing, and improve
distribution. If a sensible national policy is evolved and
implemented fairly, the current crisis can yet turn out
to be a great opportunity.