Context-

• Recently, the Union government introduced Electricity Amendment Bill, 2020 that amends Electricity Act, 2003.
• One particular proposal in the bill that has created headache for the Punjab government is that it proposes subsidy on power to farmers be given through Direct Benefit Transfer, sounding death knell for the prevailing free power system.
•  Subsidies to farmers is a sensitive issue in Punjab, especially in the light of issues like farmer suicides, agriculture sector indebtedness and fragmentation of land holdings.

Present scenario in Punjab-

• Presently, Punjab government gives free power to 14.16 lakh electricity-run tubewells
• There are no individual electricity meters installed on these tubewells
• These are powered through 5900 Agricultural Pumpset Feeders
• The power consumed through these feeders is charged
• The state government is charged Rs. 5.26 for every unit counted on Agricultural Pumpset Feeders by Punjab State Power Corporation Limited
• The cost to exchequer on this account is approx. Rs. 6000 crore every year

How much free power do farmers get?

• During kharif season, farmers get free power for approx. 8 hours a day
• During Rabi season, farmers get free power for approx. 4 hours on alternate days

What are the proposed changes?

• Individual meters will be installed on every tubewell in state
• Every farmer will have to pay the bill as per the consumption
• Later on, the farmers will get subsidy in their bank accounts through DBT

What are the issues with the proposals?

• Majority of farmers in Punjab (approx. 67%) are small and marginal farmers (landholdings ranging from 1-2 hectares)
• Paying bills in advance, even if the amount will be reimbursed later, is not possible for them
• Non-payment of bills will lead to disconnections
• Power theft will increase

    The initial indicators tell that the bill suggests subsidy to be paid directly to consumers in cash on the pattern of LPG subsidy. But expecting it to work similarly is easier said than done. Traditionally, farmers have been a powerful vote bank in Punjab and their support or lack of it can sway electoral dividends in favour of or against any political party. Moreover, even if the incumbent government musters political courage to take some drastic step, there are other issues involved-

• Currently, PSPCL is maintaining only 5900 meters installed on feeders
• Installing meters on every tubewell will incur huge financial burden to the tune of almost Rs. 1200 crore
• In addition, PSPCL lacks the manpower to take up the humongous task
• Farmers are complaining that it won’t be possible for them to pay bills on a monthly basis when they get paid after 6 months following the sale of crop.