The Hindu Business Line : AP's changing power equations

WHAT are the implications of supplying power free of cost to all farmers? Earlier, it was thought that it would only mean that the Andhra Pradesh Chief Minister, Dr Y. S. Rajasekhara Reddy, would have to provide for an additional subsidy of Rs 400 crore per annum.

However, three months after becoming the Chief Minister, Dr Rajasekhara Reddy seems to have realised that the implications are multifold. The first is the steep increase in the consumption of power by the agricultural sector and the second is the proliferation of unauthorised agricultural connections. These two factors, Dr Rajasekhara Reddy fears may lead to the collapse of the distribution system affecting millions of authorised agricultural power consumers. No amount of money can save the system in the short-term if the unauthorised power connections are not disconnected now.

And if these connections are disconnected, the very farmers who voted for his party in large numbers in the last elections will turn against him. The Opposition is all ready to cash in on the resentment that is bound to grow among the farmers. Already, there are reports that a farmer has committed suicide when officials disconnected his power connection and the Opposition parties staged a dharna in protest.

So, Dr Rajasekhara Reddy is now in a Catch 22 situation. The Planning Commission Member, Prof Abhijit Sen, recently said that sops, such as free power, would soon "boomerang" on the very government that introduces it. "The political costs will outweigh whatever political gains" made in this regard, he said. This could well be true in the case of Andhra Pradesh. However, the surprising element is that it is happening sooner than expected.

In the run up to the elections to the State Assembly in May, Dr Rajasekhara Reddy even asked the farmers not to pay their electricity tariff arrears as the Congress(I), if it came to power, would waive the dues. True to his word, Dr Rajasekhara Reddy waived not only the arrears but also introduced the free power supply scheme for the agriculturists on the day he was sworn-in Chief Minister.

Following this, the demand for power supply in the State increased substantially in July and August compared to the corresponding period last year. The average daily drawal of energy during the third week of August was 150 million units (MU) and the estimated agricultural consumption was 60 MU compared to 35 MU during the corresponding previous period.

The increase in agricultural consumption, according to the State Government, is mainly due to the rise in unauthorised power connections from 1.39 lakhs to 3.5 lakhs in the last three months and enhancement of the capacity of pumpsets to higher rating. On an average, 70,000 unauthorised agricultural power connections came into existence in the State every month in the past three months.

A sample survey by the electricity authorities in Malkapur village of Koilakuntla mandal in Kurnool district in August revealed 88 unauthorised agricultural connections besides the 153 authorised connections. Of these, 44 connections came into existence in the last three months. Further, 47 new borewells had been drilled and could be used any time by installing motors.

Similarly, in Moosapally village of Nalgonda mandal there were 1,000 agricultural connections. Of these, only 405 were authorised. One farmer in the village had 60 connections. As the power supply was free for all farmers regardless of landholdings or the number agricultural power connections, everyone is enjoying free power.

The State Government had also stated that the capacity of pumpsets had also been enhanced at several places. For instance, in Kuchivaripally village of Yellanoor mandal of Anantapur district, the connected load had increased from 913 HP to 1345 HP in the recent past, an increase of 47 per cent.

In Chittoor, Cuddapah and Nalgonda districts, the power consumption rose by 40 per cent. Accordingly, the failure of distribution transformers had increased from 10 per cent to 20 per cent. There was also stated to be a rise in the incidence of electric motor burn-outs.

The Government expects that the consumption of power by the agricultural sector will go up to 85 MU per day from the current 60 MU. Hence, it wants disconnection of unauthorised power connections but the Opposition parties, particularly the Telugu Desam Party (TDP) and the Bharatiya Janata Party (BJP), are against such a move. The TDP is demanding regularisation of all unauthorised power connections as the farmers have spent "Rs 1,100 crore on drilling bore wells and installing pumpsets". Besides, disconnection of power will affect 10 lakh acres of standing crops.

Now, the State Government plans to come out with a "comprehensive policy" on supplying free power to the agricultural sector after consulting experts, representatives of various political parties, farmers' organisations and the people, in general.

But even while Dr Rajasekhara Reddy trumpeted the free power policy at every election meeting, experts warned against such a measure.

The book on Andhra Pradesh Development, brought out by the Hyderabad-based Centre for Economic and Social Studies (CESS), pointed out that, leave alone free power, even the non-metered flat rate of tariff introduced by the erstwhile AP State Electricity Board from 1982 onwards had led to rapid rise in the agricultural consumption.

According to Mr T. L. Sankar, an energy expert and former Chairman of the APSEB, a viable solution would be to combine subsidy on power with metering of pumpsets within a decentralised system of distribution through the participation of user-farmers. A reasonable subsidy on a certain number of units sufficient to pump water for one or two hectares can be given to all the farmers where there are no assured sources of surface irrigation.

This apart, Mr Sankar says coupons could be issued to farmers sufficient to cover the cost of subsidised electricity which they can use to pay bills, while paying on their own for the excess of electricity consumed.

This system would have the merit of inducing economy on the use of electricity beyond the subsidised units by the middle and large farmers who were in fact the bulk consumers, while providing relief to the small and marginal farmers.

Since all farmers are provided subsidy uniformly at a flat rate, Mr Sankar says the scheme can become politically feasible, even as the effective incidence of electricity rate will be progressive, because the proportion of subsidised consumption declines as the size of holding increases.

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