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Andhra Pradesh clears electricity subsidy transfer to farmers

New Delhi | Updated on September 03, 2020

Andhra Pradesh may soon be the first State to act on proposals under the Draft Electricity (Amendment) Bill, 2020 and initiate a cash subsidy transfer to farmers for electricity. The State Cabinet on Thursday approved a proposal in this regard, an official statement said.

“The government shall implement the scheme, through direct cash transfer mode, where the money will be directly credited to farmers’ bank accounts for the power consumed by them in their fields and they, in turn, shall pay the power bills to the Power Distribution Companies (discoms). The pilot project will be introduced in Srikakulam and it will cover the entire State from April 2021,” the statement added.

Regular power supply

According to the State government, no connections will be removed, all the connections will be regularised and nine hours power supply maintained during the day. The cost of the smart meters should be borne by discoms and the State. There will also be dedicated bank accounts that will be created solely for the purpose of paying the subsidy amount.

“This is a long-awaited reform measure in the power distribution sector. A metered connection, discoms getting regulator determined full cost recovery from consumers and consumer receiving direct subsidy transfer from government using the Jan Dhan, Aadhaar and Mobile (JAM) trinity is the ultimate solution for many of the sector’s financial woes,” said Debasish Mishra, Partner, Deloitte.

BusinessLine had reported in April this year that proposals in the draft Electricity (Amendment) Bill, 2020, will make it tougher for State governments to cross-subsidise consumers. According to industry watchers, provisions that ensure cost-reflective tariff in the draft Bill will ensure that all consumers pay for at least the cost of power once the new Electricity Act is enforced.

This will result in consumers with less power consumption paying less fixed charges than those with higher consumption. But everyone will have to pay the same tariff per unit of power consumption.

Published on September 03, 2020

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