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.


What is the issue?

  • 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”. Out 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.


How big is the issue?

  • 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.


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.


SourceThe Hindu Business Line


QUESTION – Rich farmers in the state of Punjab are pinching a hole in the state exchequer by bleeding the meagre state resources in the name of free power and agricultural subsidies. How can the state government rationalise these subsidies, especially free power, to ensure welfare for small and marginal farmers?