Punjab CM firm, free power to farmers to stay

The group of experts led by eminent economist Montek Singh Ahluwalia has suggested radical policy changes in agriculture, industry, skill development and digitisation to propel growth in Punjab.

The first report, submitted to the Punjab Government last week, was discussed by Chief Minister Capt Amarinder Singh with the experts through video-conferencing. He reiterated that free power to farmers would stay. He agreed with the recommendation that diversification in agriculture was the way forward. The final report is to be submitted by December 31.

Montek panel’s key recommendations:-

1.Diversification in agriculture
2.Rationalising power subsidy
3.Capping wages of employees
4.Agri land for non-agriculture use
5.Thrust on skill development
6.Vertical growth, digitisation

Hinting at corporatisation in agriculture, the report recommends creating 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. It favours change in land laws for allowing agriculture land for non-agriculture use and cash subsidy for farmers.

In a report submitted to the Punjab government, Ahluwalia has also asked it to gradually reduce procurement of paddy from the extremely water-stressed areas, a suggestion which is expected to receive a sharp reaction from farmer community.

The free power largesse --- incurring an annual burden of Rs 6,500 crore on the cash-strapped government --- has remained a sensitive political issue in Punjab, with no regime really being able to do away with the populist measure ever since it was announced in 1996.

Punjab chief minister Capt Amarinder Singh had sought suggestions from the expert group, led by Ahluwalia, on ‘medium and long term post-COVID economic strategy for Punjab’.

The report lists out three damaging consequences of free power policy. “It has led to an unsustainable burden on the budget and limits the state government’s ability to incur other expenditures essential for development.

The total power subsidy in 2021 amounts to almost 1.9% of GSDP,” says the report. There are at least 14.5 lakh agriculture tubewells that draw benefit of this scheme. The Amarinder government had proposed to generate bills for tubewell use and offered direct cash benefit to farmers. However, the plan was junked after stiff political opposition.

Secondly, the policy has very damaging environmental consequences because it promotes water intensive paddy cultivation, leading to an excessive use of groundwater.

Only big farmers were really benefitting from the scheme.

FOLLOW HARYANA MODEL

The expert group said Punjab needs to reduce the area under paddy by about 25 lakh acre (out of total 76 lakh acre under paddy) over the next 6-7 years.

Suggesting Punjab to adopt Haryana model, it said the latter is currently giving an incentive of Rs 7,000 per acre in overexploited blocks to diversify.

“Punjab should consider something along these lines. This would reduce the use of electricity, resulting in big saving on the subsidy front,” says the report.