Free power to farmers is considered a drain on the Punjab government exchequer and groundwater. It has been hotly debated since 1997.

The annual electricity bill in 2022-23 has touched the ₹7,000-crore mark, which is a record payout. It is noteworthy that around ₹4,000 crore goes to the big farmers who own more than 10 acres of land. Therefore it’s time to consider the rationing of the free power.

Several studies have revealed that capping of free power to big farmers could save the State exchequer around ₹2,500-3,000 crore a year, which could be spent on the welfare of marginal and small farmers.

According to the Agriculture Census- 2015-16, “Punjab has 11 lakh operational land-owning farmers who operate around 14.50 lakh tube wells and about 1.6 lakh of these farmers have under 2.5 acres of land and are classified as marginal farmers. 2.1 lakh have landholdings between 2.5 and 5 acres (small farmers), and 3.7 lakhs have landholdings between 5 and 10 acres (semi-medium farmers).

Around 3.1 lakh hold above 10 and upto 25 acres of land are classified as medium and the landholdings over 25 acres are with 60,000-odd big farmers”. O

ut of 11 lakh, 3.7 lakh farmers who hold over 10 acres of land have multiple motored tube-wells and enjoy more free power than marginal and small farmers.

In 2020, a report submitted by a group of experts led by Montek Singh Ahluwalia, to the Punjab government explained that 56 per cent of the total power subsidy that the State has to bear annually goes to medium and big farmers who own more than 10 acres.

Earlier Punjab State Farmers’ and Farm Workers’ Commission, had also recommended the withdrawal of free power to farmers who own over 10 acres or pay income tax.

Therefore, the mandate of only one motor up to a certain horsepower to be allowed as pricing free for all the farmers, would reduce subsidy and restore ecological balance.

Power Subsidies

In the current fiscal year 2022-23, the total power subsidy bill is set to touch ₹15,846 crore, including ₹6,947 crore to agriculture consumers, ₹6,396 crore to domestic categories (including 300 units free) and ₹2,503 crore for industrial consumers.

In 1997-98, when the then Chief Minister Rajinder Kaur Bhattal made electricity free for all farmers, the total power subsidy bill was only ₹604 crore. This means that there is a whopping 2,623.5 per cent increase in the power subsidy from 1997-98 to 2022.

According to the Punjab State Power Corporation Ltd (PSPCL) data, about 14.5 lakh agriculture tube wells are provided free power in the State.

The number increased from 2.8 lakhs tube wells in the 1980s. With the number of tube wells increasing, the area under rice increased and the water table went down. Free power has led to a shift to rice cultivation, which is a water guzzler.

The real acreage share increase has taken place in paddy, from 6 per cent in 1970-71 to 40 per cent in 2021-22, whereas, in the case of wheat, the percentage increase in acreage was just from 40.5 per cent in 1970-71 to 44.9 per cent in 2021-22.

As opposed to this, the acreage under pulses decreased from 7.3 to 0.4 per cent, and in the case of oilseeds, the share decreased from 5.2 to 0.5 per cent during the same period.

Exploitation of groundwater by the big farmers reduces the amount of groundwater available for marginal and small farmers.

The way forward

A robust power subsidy policy is the need of the hour. Maharashtra is enacting laws to regulate agriculture tube wells. The Punjab State Electricity Regulatory Commission (PSERC) should bring a suitable farm power subsidy policy and could rationalise the subsidy burden on the State by replacing multi-motored tube wells of large farmers with one motored tubewell.

Most electric tubewells should be replaced with subsidised solar tubewells.

The writer is Vice-Chairman, Punjab Economic Policy and Planning Board