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Friday, September 17, 2021

Silent on free farm power, Montek panel says cross-subsidy is hurting industry

The Montek Singh panel’s final report has underlined that “cost and quality of power is a critical factor affecting the competitiveness of industry in the state

Written by Kanchan Vasdev | Chandigarh |
July 28, 2021 7:02:40 pm
The three farm laws are only a part of the far wider set of economic reforms that will be needed to stabilise Indian agriculture.

AMID PUNJAB’S power woes grabbing headlines in run up to next year’s Assembly polls, the Montek Singh panel’s final report has underlined that “cost and quality of power is a critical factor affecting the competitiveness of industry in the state and its ability to attract new investment”. The report, however, is mostly silent on the contentious issue of free power to the agri sector.

While the panel that had created a controversy by frowning at the free power given to farmers in its first report, has preferred to remain quiet in its second report, it has stated that the practice of cross subsidisation — in which industry is expected to bear the burden of subsidising certain groups of consumers — needs to be re-examined.

“State governments can always decide to subsidise some groups of consumers, but the subsidy should be borne transparently by the budget. Loading it on industry, or even the commercial sector, has the consequence of reducing the competitiveness of Punjab’s industry which has implications for growth of GSDP and employment in Punjab. The entire question needs close examination by a group of experts who should be tasked to make recommendations after studying the experience of other states,” it has stated.

Power tariff higher than advertised
“The GoP’s brochure promoting investment in Punjab highlights a low power tariff as one of Punjab’s positive points, but the fact is, as pointed out in our first report, the effective tariff in Punjab is much higher than the Rs 5 per unit advertised by the state. There are also rampant and unscheduled power cuts,” it has said, adding that several steps need to be taken to remedy the situation.

Pointing out the issue that ails the power transmission system, the report said: “The distribution and transmission system needs to be strengthened and also managed better. The power utility of the state, PSPCL, has been unable to make investments necessary to keep the transmission and distribution losses low and to supply good quality power. To address the situation, GoP should either make available the budgetary resources that PSPCL needs or explore alternate ways of improving management of power distribution. Looking ahead, as the share of solar and wind generation in total electricity supply increases, a substantial expansion in investment will be needed in the distribution segment in all states.”

Digitisation
The panel has also expressed a view on Punjab’s digitisation. Despite many ongoing efforts, Punjab is clearly lagging behind other states in digitisation.

According to the report, “The latest ICT readiness indices place it at the tenth position amongst all states (tele-density: 78 in rural and 177.56 in urban; wireless density: 77 in rural and 173 in urban; internet subscription: 116.96 subscribers to 100 people etc). There is scope for increasing digitisation of processes in many government programmes and policies. We are pleased to note that GoP recognises the need to ramp up digital infrastructure and promote its usage across sectors and has responded enthusiastically to many of the recommendations made in our first report regarding expanding digital infrastructure, using data to improve governance, digitisation of agriculture value-chains and increasing the digital footprint of the MSME sector.”

Covid fatality rate
Commenting on Punjab’s fatality rate, the panel has said that Punjab’s fatality rate closely tracked the country average but it was much higher in both peaks.

“We do not have a good explanation for this phenomenon, but several factors may be at play here. One possibility is that there were long delays in approaching hospitals for treatment after the onset of symptoms, especially in villages. A short study carried out by the state government in March 2021 showed that 77 per cent of those who had died from the virus in the previous 10 days, reported to the nearest health centre when their symptoms had reached the severe stage.

“The high incidence of co-morbidities such as hypertension, diabetes, cancer, etc. in the state’s population may have also contributed to higher fatality rates. Further, the early arrival of the more deadly delta variant in Punjab before other states during the second wave may have caused more deaths. Lastly, it is also possible that the reporting of deaths in Punjab was simply more accurate than in many other states. A more detailed study must be carried out to identify the reasons for the difference. The problems posed by delayed reporting must be

especially anticipated in case there is a third wave,” the panel has said.

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