Measure ‘Free' Power To Manage It: Build Transparent Subsidy Regime And Meter All Electricity Consumption In Agriculture

As part of its efforts to address the legacy of disco losses and their contagion effect on the overall power sector, the Centre is considering a slew of reforms including reducing power subsidies, as envisioned in the proposed Electricity (Amendment) Bill, 2020.

- Vivek Sharma

The ongoing stir by farmers could upend all this and power for agriculture could continue to be free or near-free (collateral damage as it were) for a while. However, a durable solution will necessarily hinge on detailed scrutiny of the state of affairs in some of the largest discoms and a blended approach to address the burgeoning problem.

To reiterate, management of electricity consumption by the Agri sector will need to ride on its measurement. Some of the steps that can help include universal metering of agricultural connections, subsidy disbursal through direct benefit transfer, and solarisation of Agri feeders.

But first, let us consider that free power comes at a huge cost. Free power to agriculture accounted for ~22% of the total electricity sales by state discoms in fiscal 2019, leading to a tariff subsidy burden of ~Rs 1,10,391 crore on state exchequers due to almost zero (Punjab and Tamil Nadu) to very low average billing rates for electricity to agriculture. Interestingly, 11 agrarian states account for ~95% of the total power sales to Agri consumers in the country.