After the farm loan waiver, the Maharashtra government has now announced an ambitious plan to supply solar-powered agricultural pumps at highly subsidised rates to one lakh farmers.
The big-ticket announcement — which comes in the run-up to the 2019 Lok Sabha polls — is being seen as the biggest populist measure by the state government since the farm loan waiver it had rolled out in June 2017. But faced with mounting debt, the state’s fiscal managers have made it clear that the state’s exchequer won’t be able to bear the additional burden, prompting the government to consider off-budget borrowings or raising taxes on electricity for all consumers to make up for the shortfall.
According to initial estimates, the project — which is modelled on the lines of the Centre’s Atal Solar Krushi Pump scheme — will cost Rs 3,726 crore. The state-run Maharashtra Energy Development Agency (MEDA), the nodal agency for the project, worked out the estimates following directives issued by Chief Minister Devendra Fadnavis in this regard on October 3.
The Maharashtra government, which is struggling to recover farm electricity arrears, had earlier announced a long-term plan of shifting its 45 lakh farm consumers to the solar grid within five years. Under the ASKP scheme, the state government had on October 3 itself cleared a proposal to supply 7,000 such pumps at nominal costs to farmers awaiting power connection.
Those owing less than five-acre land would be eligible for a 3 HP solar-powered farm pump on payment of just 5 per cent of the cost, while those with bigger farms will be entitled for 5 HP pumps on similar concessional grounds. The state’s scheme, which covers a larger farmer base, is modelled on the same lines.
Based on the finance department’s red-flag, sources said that the state government now has plans to split the implementation of the state-sponsored project over two financial years to reduce the annual burden. Accordingly, the MEDA has now proposed distribution of 50,000 farm pumps in 2018-19, and an equal number in 2019-20, which will bring down the annual burden to Rs. 1713 crore.
Of which, the state’s kitty can absorb Rs 434 crore, which would include utilisation of budgeted funds from the general budget (Rs 67 crore), the tribal sub-plan (Rs 150 crore), and the SC/ST sub-plan (Rs 217 crore). But this still leaves a shortfall of Rs 1279 crore, for which the government is considering three options.
Raising taxes on the sale of electricity universally is one of the options being considered. Based on MEDA calculations, the government will need to raise taxes by 12 paise per unit consumed to make up for the shortfall. Another option being actively considered is procuring a short-term low interest loan from the National Bank for Agricultural and Rural Development (NABARD). But the state’s fiscal managers have indicated that the government’s annual debt servicing bill is already to the tune of Rs 30,000 crore.
The state is also exploring the option of a tie-up with the Centre’s Energy Efficiency Services Limited (EESL) for implementing the project and gap-funding. The EESL can then be paid for its services on an annual installment basis. The BJP government in Rajasthan has adopted one such model.