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A Tribune Special
Free power in Punjab to go
Sarbjit Dhaliwal and Ajay Banerjee
Tribune News Service

Chandigarh, December 7
It appears that better sense is going to prevail on the ruling SAD-BJP combine in Punjab. Though at a meeting of the coordination committee, both the SAD and the BJP have arrived at a consensus to discontinue free power to the farm sector, impose octroi and collect abiana — a sort of tax — on the water supplied to farmers through canal network, a formal discussion in this regard is expected to take place at the cabinet meeting on December 9.

Confirming the development, sources in ruling coalition told the TNS today that as the fiscal condition of the state was deteriorating day by day, there was no alternative except to take this “hard decision,” an indication towards which was recently given by Chief Minister Parkash Singh Badal himself.

The government has estimated to mop up about Rs 1,350 crore annually by doing away with free power, by imposing octroi and levying abiana. Notably, the state will save another Rs 700 crore due to this decision and crucially it will be eligible for various soft loans and grants from the central government that are linked to reforms in the power and other sectors.

A few weeks ago, the BJP had made it clear to Badal that it would not oppose the reimposing of octroi and other taxes meant to run the social utilities in urban areas provided he also stops free power to farm sector. In fact, the BJP is against freebies and it had fully supported the stand taken by Finance Minister Manpreet Singh Badal that the power to farm sector could not be given for free. He was also of the opinion that certain taxes and levies should be imposed to gear up the tempo of development, which is now almost standstill in the state.

Working president of the SAD Sukhbir Badal is reported to have also agreed after being told about the harsh fiscal realities.

For the farm sector the state intends to charge farmers for power as per the old formula that was stopped in August, 2006 when Capt Amarinder Singh, in the last few months of his government, announced free power to the farmers. There will be a fixed charge of Rs 60 per month for each bhp of the tubewell. For example if it is a 5 bhp motor the farmer will have to pay Rs 300 a month or Rs 3,600 a year. At present a farmer is earning between Rs 40,000 and Rs 45,000 per acre annually and this sum he should not feel difficult to pay, said a policy maker. No new energy meters will be installed, it will be a flat rate — meaning thereby subsidised power but not free power. Haryana and Andhra Pradesh follow this pattern.

The state hopes to mop up Rs 650 crore from the farm sector. This also means that the Punjab State Electricity Board officials will not be able to book any extra transmission and distribution losses to the farm sector. This is estimated to be savings of Rs 400 crore annually. The increase in power tariff in the urban areas, which was a major issue for the BJP, may not be rolled back after the SAD agrees to withdraw free power from the farm sector. This will save another Rs 292 crore, thus taking up savings to Rs 700 crore.

As far as realisation of abiana goes, the state is concerned that the canal network needs augmentation and for that money was required. The state will charge about Rs 150 per acre annually from the farmers. This will result in the revenue of Rs 155 crore.

Octroi will be levied at the same rate as it was done earlier. This move was necessitated as the municipal bodies had no funds to run their own affairs or spare money for development.

It was crucial for Ludhiana and Amritsar that are part of the Jawaharlal Nehru national urban renewal mission scheme.

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