300 units of free power: Keeping “promises”  to mounting debt in Punjab

By Prabhjot Singh*

The Punjab Chief Minister Bhagwant Singh Mann chose April 16 to announce free 300 units of power to all consumers  from July 1.By the time the announcement was made, consumers had already started feeling the burn from power and water shortages in the State.

As environmentalists and governments across the country struggle to find ways to overcome the annual desperation, Punjab has little hope of coming out of the spiral set off by its free power scheme to pump out water for its farms besides enthusing existing domestic beneficiaries of free 200 units to consume more without any extra cost.

The damage is two way: the government goes deeper into debt paying for the power subsidy, and the ground water table sinks towards depths from where pumping may become unviable in near future.

The total debt of the State stands at Rs 2.86 lakhs. Salaries, power subsidy, pensions and interest on debt  necessitate more and more borrowings to add to this mounting debt.

Let us have a look at the power subsidies:

Total power connections in Punjab(2020-21) 8375548

Industrial connections  146899

Agriculture 1387681

As on March 31, 2013:

Total farmer families 11.5 lakh

SC families getting free power 10.71 lakh

BPL families getting free power 73,346

Average consumption

If a pump consumes 5 units an hour, total power consumed during a day’s six-hour supply would be 30 units a day. (1-HP motor consumes 0.746 kW/hr)

Power subsidy for farms

Year                     Rs in crores

1996-97                404

1997-98                604

1998-99                928

1999-00                1,219

2005-06                1,386

2006-07                1,769

2007-08                2,160

2008-09                2,295

2009-10                2,805

2010-11                3,487

2011-12                3,879*

2012-13                 4,188

2013-14                 5,785

2022-23.               19,000**

*Total power subsidy paid in 2011-12

(including SC and BPL families)

**Exact figure will be known only after the new scheme is implemented.

Government estimates show that, as of March 31 this year, Punjab had 84 lakh electricity consumers, 11.50 lakh commercial consumers, 1.50 lakh industrial consumers, and 14 lakh agricultural consumers. It is for the last category that electricity is completely free at the moment.

Going by what officials say Punjab has 11 lakh land-owning farmers who operate around 14 lakh tube wells. Of them nearly 1.6 lakh have under 2.5 acres, another 2.1 lakh have landholdings between 2.5 and 5 acres, and 3.7 lakh have between 5 and 10 acres. Nearly 8 to 10 per cent of total farmers have more than one tube well connection through which free power is used. 

Then there are 3.1 lakh  farmers who hold between 10 and 25 acres while the largest landholdings — over 25 acres — are with  about 60,000-odd farmers.  

Just before the April 16 announcement of 300 units of free power to all domestic consumers was made by the Chief Minister Bhagwant Singh Mann, the Punjab State Electricity Regulatory Commission that  determines power tariffs, had in a petition to the Punjab Government sought Rs 13,929 crore in exchange for providing free or subsidized power to various categories such as farmers, poor sections of society and the industry. It included Rs 6,936 crore for the agricultural sector, Rs 4,000 crore for domestic sector and Rs 3,000 crore for industrial consumers. 

The announcement of free 300 units will cost the State nearly Rs 5,000 cores. Therefore, the total power subsidy bill for the current fiscal year would be in the range of Rs 19,000 crore after adding the latest subsidy. 

The State already owes an outstanding amount of Rs 7,118 crore of the last fiscal year. Thus all put together  the state government would have to pay nearly Rs 26,000 crore to the PSPCL this fiscal year on account of subsidized power.

The Punjab State Power Corporation Limited (PSPCL) claims that there are 73.8 lakh domestic consumers in the State and of these, 62.25 lakh will get the benefit of free power announcement. The beneficiaries are estimated to get near 10300 million unit of power free of cost.

With every farmer in Punjab getting free power, there were 13.87 lakh tube well pumping out water without paying anything. The total cost of the power, paid by the government, which was Rs 3,879 crore in 2013-14 is now touching 7,000 crore.

In 2012, when the Food and Supplies Department disbursed paddy bonus to every farmer individually, the number of beneficiary families came to around 10 lakh. This figure was taken as a rough approximation of the total farming families in the state. This was perhaps the first time that a near accurate number of farming families was attempted. It was later corroborated by the then Finance Minister Parminder Singh Dhindsa, who in his Budget Speech  of 2013 promised to continue the free power supply to ‘10 lakh farmer families in the state’.

Multiple connections

There is a  gap of nearly 3.5 lakh between the number of tube wells and farming families. This indicates many farmers have more than one power connection. State power corporation officials admit there is hardly any campaign ever to detect misuse of farm connections.

Initially, there was a ceiling of one power connection per family. But this was later removed as many farmers with larger land holdings found it inadequate. According to experts, one connection of 7.5 HP motor can serve only 5-7 acres.

The number of farmers with more than one power connection is estimated between 8 and 10 per cent, with holdings ranging from 15 to 50 acres. Experts believe 75 per cent of Punjab farmers have one connection each, and their holdings are between 2.5 and 7.5 acres.

The power corporation, however, does not have data on the distribution pattern of tube well connections among small, marginal and big farmers. 

Surface water ignored

Growing dependence on tube wells for irrigation is not advisable, as this leads to rapid depletion of underground water reservoirs – estimated at over 1 foot a year, in Punjab. This also leads to less exploitation of the available surface water. Letting canal or river water go surplus could go against Punjab in inter-state water disputes. The convenience of irrigating farms with tube wells — as opposed to waiting for ones turn for canal water on cold winter nights — combined with free power, makes farmers prefer ground water.

There were various ways in which this free power was misused, admit power officials. One of them was farmers installing motors of capacities larger than sanctioned. For upgrading the capacity of a motor, a fee of Rs 4,500 per kW increase was charged. However, farmers often waited for ‘voluntary disclosure schemes’, under which the fee was lowered to around Rs 1,500. The problem was seldom handled to a permanent solution.

Farmers are supposed to run motor pump only of sanctioned capacities, and power is supplied on dedicated tube well lines for limited hours in a day. A farmer can also have two light points (CFL bulbs) — one inside the pump house and one outside. Any other use of this free power is prohibited. If a tube well connection is sanctioned under a priority category, such as for a farm with sprinkler irrigation, discontinuation of sprinklers is then considered misuse.

Free for all

Change of land use unofficially remains a major concern for the Power Supply Corporation. A boom in real estate over the past two decades saw many farmers disposing of their agricultural land for high returns. Some of the enterprising among them, however, retained small portions of the land on which the tube well was housed to retain the benefit of free power subsidy. In one case, a farmer bought new tankers to start supply drinking water for a price after his requirement for irrigation had ended as he had sold his agricultural land. In another case, a farmer started supplying water and also electricity to a builder after selling the land to him.

Even if we take that 2 per cent of the estimated 13.87 lakh farmers would have sold their land to builders or changed the land use, the free power connections misused on that would account for more than Rs 85-100 crore of the power subsidy, power corporation officials admit. 

The power subsidy to the farm sector has grown from Rs 404 crore in 1996-97 to Rs 5,785 crore in 2013-14 and is now past Rs 7,000 crore in the current fiscal. This excludes the cost of reimbursement for free power supplied to both Below Poverty Line and Scheduled Caste families in the state.

Even as the combined number of these two groups is more than double the number of farming families — 5 lakh BPL families and 18 lakh SC families, compared to 13.87 lakh farmer families — the benefit of power subsidy is heavily tilted in favour of the latter. Subsidy on account of farm supply was Rs 3,879 crore in 2011-12, while for the BPL and SC families it was Rs 379 crore.

Within a few days of announcement of  the new 300 units scheme, the Government was quick to rephrase it saying only those  belonging to SC/BP/freedom fighters with less than 1 KW load would be eligible for exemption from payment of any bill for first 600 units in a bimonthly bill. Nearly 4 lakh consumers have sanctioned load of 2 KW.

Besides its own sources of thermal and hydel power, the Punjab Power Supply Corporation also makes purchases from outside to maintain “uninterrupted supply” to the farm sector during the peak season. The average cost of such purchases is around Rs 4.00 per unit. With coal in short supply, the thermal generation has been impacted.

Sinking deeper

With level of subsoil water going lower every year, farmers are opting for deeper or more powerful pumps than sanctioned. This additional load often leads to power supply disruptions, or transformers getting burnt. Action is rarely taken, that too only against small farmers. Those with large land holdings and political influence often get away Scot free.

There are procedures meant to prevent misuse of power supplied on dedicated rural feeders, yet there are several privileged farmers whose premises and tube wells remain inaccessible to power corporation staff.

* Prabhjot Singh is a veteran journalist with over three decades of experience covering a wide spectrum of subjects and stories. He has covered  Punjab and Sikh affairs for more than three decades besides covering seven Olympics and several major sporting events and hosting TV shows. For more in-depth analysis please visit probingeye.com  or follow him on Twitter.com/probingeye