Punjab mulls 50% power subsidy for farm sector

Written by Charanjit Ahuja | Chandigarh | Updated: Jan 28 2008, 05:58am hrs
Contrary to speculation that Punjab might do away with free power to the farm sector in view of its poor fiscal state, the government is actually considering giving about 50% subsidy to the sector. Sources in the chief ministers office here told FE that the Electricity Act 2003 did not bar states from giving subsidy but only made it mandatory for the states to give advance quarterly subsidy on power tariff.

Neighbouring Himachal gives a subsidy of 78 paisa a unit on power tariff, while Gujarat and Andhra give about 29 paisa subsidy on tariff and Haryana about 35 paisa.

The Punjab State Electricity Regulatory Commission (PSERC) has asked for a Rs 2.40 paisa a unit tariff for the farm sector. The overwhelming view in the government is that it could subside tariff by 60 paisa a unit, after which the governments liability, which stood at about Rs 2,136 crore annually, will come down to about Rs 500 crore. The state principal secretary, power, recently wrote a letter to the finance department in this connection. However, the finance department is yet to respond.

Namita Sekhon, secretary, PSERC, told FE that the Regulatory Commission had sent a letter to the Punjab government on January 5, that follows instructions from the Union government which wanted to know the criteria adopted to pay subsidy in lieu of free power to the farm sector and the poor. The commission had asked the government to inform it about the schedule being followed to pay the subsidy to Punjab State Electricity Board (PSEB). Ms Sekhon said the commission would wait for the state government's response till February 5, after which the sectors being provided free power could be asked to pay for the power used.

As per rules, the state government is supposed to pay the subsidy in advance to provide free power to any sector or section of the society. In the absence or default or failure to pay the subsidy, the commission can order PSEB to charge the bill from those sections which were to get free power in view of the commitment made by the state government to pay subsidy in lieu of free power.