Agri Business

With Finance Ministry not on board, KUSUM solar pump scheme a non-starter

Twesh Mishra New Delhi | Updated on June 08, 2018 Published on June 08, 2018

Cost-effective A farmer watering his field with a solar-powered pumpset near Vijayawada   -  CH_VIJAYA BHASKAR

High diesel prices push up costs of running pumpsets, hurt farmers’ income

The Centre’s KUSUM scheme, which was announced to bring a respite to farmers from high-cost diesel-run water pumpsets and erratic power supplies, is yet to see the light of the day.

KUSUM (Kisan Urja Suraksha evam Utthaan Mahaabhiyan), the solar pump distribution scheme, was announced in the Union Budget 2018-19. But the Power Ministry has not been able to convince the Finance Ministry for the desired fund allocations. This is said to have delayed Cabinet approval and further pushed the timelines for implementation of the scheme.

Speaking to reporters a day after the Union Budget 2018-19, Minister of State (Independent Charge) for Power and New and Renewable Energy, RK Singh, had said that the scheme required a Central Financial Assistance of ₹48,000 crore for 10 years. A similar amount will have to be parked by the States and the financing institutions, he had explained. Effectively the scheme envisaged is of close to ₹1.44 lakh crore after the approval from the Cabinet.

On a per pump basis the Centre will subsidise 30 per cent of the cost, the State will do the same, and 30 per cent will be a loan. The farmer has to give an upfront cost of 10 per cent and then pay the instalments to the bank. Speaking to reporters on February 20, Singh had said that a Cabinet approval for KUSUM will be accorded within 20 days, i.e. in March 2018. Almost three months later, the approval is still pending despite record high diesel prices pushing up the costs of running water pumpsets and hurting the income of farmers. Singh has now said that the KUSUM scheme will be implemented from July.

The price of diesel has risen steadily from February 1 on the back of higher crude oil and benchmark product prices. On February 1, diesel sold at ₹64.11 a litre in Delhi but by May 29, it was selling at ₹69.31 a litre. Prices have cooled since and on Friday diesel sold at ₹68.58 a litre in the Capital. Compared with the corresponding period last year, diesel prices are up 24 per cent. Experts estimate the share of fuel in the cost of cultivation per acre at between 10 and 25 per cent. While costs are rising, realisations for farmers are under pressure due to the bearish trend in prices across categories of commodities. According to official estimates, India had about 30 million farm pumps of which 10 million are diesel powered.

In addition to cost-saving, KUSUM also envisaged a source of income for farmers by selling excess power back to the grid. KUSUM is modelled on the success of a similar programme in Gujarat’s Kheda district where six farmers raked in revenue of ₹7lakh from selling surplus power over two years. This too is an opportunity that farmers have lost out because of the delay in approval.

Published on June 08, 2018

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