Costly power play

In Punjab, the term “free power” has long ceased to be an agricultural support mechanism and, instead, become a symbol of populist inertia. What began in 1997 as a targeted subsidy for small farmers has ballooned into a politically sacred cow that drains state finances without addressing structural issues in agriculture, energy use or public accountability. This fiscal, the power subsidy bill is set to exceed Rs 20,500 crore — 10 per cent of Punjab’s entire budget. Of this, Rs 10,000 crore is earmarked for agriculture and Rs 7,600 crore for domestic users. Astonishingly, the overall subsidy amount now rivals the state’s revenue deficit. If this doesn’t alarm policymakers, what will?

Successive governments, across party lines, have fuelled this spiral. They have been bowing to pressure from vocal farm lobbies and chasing electoral gains through handouts rather than holistic reform. The AAP government’s expansion of the subsidy to cover 300 free units for domestic consumers has only deepened the crisis. With around 90 per cent of the households now receiving zero bills, the incentive to conserve or pay is all but gone. Meanwhile, Punjab State Power Corporation Limited (PSPCL) is unable to fill staff vacancies, struggles with Rs 2,000 crore in annual power theft and has incurred massive losses despite a Rs 4,000-crore government bailout.

Instead of strengthening institutions or investing in sustainable irrigation, the state continues to chase votes with giveaways it cannot afford. The longer this continues, the harder it will be to revive Punjab’s economy, attract investment or create jobs. Leadership must shift from doling out sops to building long-term infrastructure, be it through another Verka, Markfed or agricultural innovation. Punjab must decide whether it wants to keep subsidising power or empower its future.