Successive govts offered power freebies for political advantage

Ruchika M Khanna

Chandigarh, December 7

The rating of Punjab discoms being downgraded by the Centre stems from a “political takeover” of the state power utilities that has played havoc with the fiscal health of the organisations.

The rating of state power utility has been downgraded from “A” in 2019-20 to “C +” in 2020-21, in the just released ratings by the Union Ministry of Power. The state has been asked by the Centre to bring improvement in its financial viability.

However, a perusal of the fiscal indicators of state power utilities reveals that the successive governments have always sacrificed fiscal prudence in managing power sector at the altar of political gains.

The previous Congress government did not raise power tariff in two years of its regime. In fact, in the past two years of the Congress rule, the tariff was reduced by 2.68 per cent in 2020-21 and by 0.5 per cent in 2021-22.

Even the Aam Aadmi Party (AAP), after it came to power earlier this year, has refused to raise the tariff, which remained unchanged during the ongoing fiscal.

Power tariff was raised by 9.33 per cent in 2017-18 as soon as the Congress had come to power. The year thereafter it was raised by a meagre 2.17 per cent and by 1.78 per cent in 2019-20- the year when the General Elections were held.

In fact, in 20 years, since the power subsidy is being given for providing free power to agriculture consumers, election years have either seen bare minimal increase in power tariff, that did not even cover the cost of inflation, or a reduction in tariff, which proves that political considerations dominate the decisions on increase in tariff.

The only exception was in the Parliamentary polls year 2009, when the tariff was increased by 12.42 per cent, and Assembly polls year 2011-12, when the power tariff was increased by 9.19 percent.

With the 300 units per month sop to domestic consumers starting from July this year, the power subsidy bill of the state is expected to soar to Rs 20,000 crore, much above the budgeted subsidy bill of Rs 15,845 crore.

However, the subsidy being released by the government to the power utility is according to the budget estimates and not the revised estimates for subsidy. This will only add to the fiscal woes of the state power utilities. To add to the woes of this important sector, the previous government has also left behind a legacy unpaid subsidy of Rs 9,020 crore.