Govt for end to power subsidy
by Gobind Thukral
Tribune News Service

CHANDIGARH, Oct 18 — The Akali-BJP coalition government is veering around the idea of withdrawing free power concession to farmers. "This has almost been decided and you may expect an announcement any time. This decision is a tough one, but we are moving in this direction", two ministers told TNS here today. None was prepared to come on record as they felt the announcement should be made by the Chief Minister.

The Cabinet sub-committee on fiscal measures had already debated the issue thrice, the ministers said.

The Punjab State Electricity Board (PSEB) which suffered heavy losses had to bear a burden of Rs 300 crore annually because of this concession. Free power and free irrigation water were the two main sops announced by the Chief Minister, Mr Parkash Singh Badal, when he assumed office in 1997. This raised his political standing among the farmers, the backbone of Akali politics. But the burden on the exchequer was heavy.

The government has only partly compensated the PSEB. According to a Cabinet note, the total subsidy to the farm sector comes to a whopping Rs 1,600 crore annually. Some subsidies are direct and some indirect. Free power was a direct subsidy.

Official sources here said the decision could be the beginning of the end of the subsidy regime in non-productive areas. "The government would weigh each subsidy from two angles. Does it really help the deserving and is there any political benefit to the government? Power fell in the latter category initially, but now it seemed of little help to the Akali-BJP coalition," a senior officer observed.

One government study by the finance department has calculated that the government was paying Rs 486 crore annually as power subsidy alone.

Chief Minister Parkash Singh Badal and the Cabinet sub-committee have reached the conclusion that free power had done more harm than good to the state. But Mr Badal has been finding it difficult to take a final decision on the issue. He had been discussing the matter with experts and his colleagues for some time now. One reason for the decision has been that free power and water to the farmers has meant stoppage of all financial credit by the World Bank, the International Monetary Fund (IMF) and the Asian Development Bank. No money has come from these international institutions except for the health sector. Indian financial institutions like the Nabard, too, were feeling shy of funding development projects. As a result, development in the state was suffering.

Also, free water meant wastage. Similar was the case with power. One point of criticism was that rich farmers had benefited more than the poor and small ones. Also, at least 2.4 lakh applications for tubewell connections could not be taken up as the PSEB was scared of bearing losses on account of more subsidy. In fact, crores of rupees deposited by farmers for these connections are with the PSEB.

The situation was exploited by the Opposition. Even Mr Gurcharan Singh Tohra, rival Akali Dal leader, has suggested withdrawal of free power to those with large farm holdings. "It should be given only to small and marginal farmers", he has said.

But what really helped the Cabinet sub-committee make up its mind was the empty coffers of the government. The government has been scratching every possible source to pay salaries and pensions. It has been using public provident fund, lottery money, money available to the Food Department to buy foodgrains for the central buffer and money from public and cooperative sector institutions for day-to-day functioning.

Take the case of municipal bodies in Punjab. The state has diverted Rs 285 crore meant for urban development and civic improvement. The government owes Rs 130 crore to councils, Rs 70 as share from excise collection, Rs 168 crore as 20 per cent share in some taxes as per the 74th Constitutional amendment and Rs 46 crore received from the Centre to be passed on to the councils. The government has been forced to mortgage its property and even sell it.