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Explained: How would Direct Benefit Transfer of power subsidy work?

The Punjab government pays around Rs 6,000 crore power subsidy bill to Punjab State Power Corporation Limited (PSPCL) every year under its ‘free power scheme’ to the farming sector.

Written by Anju Agnihotri Chaba | Chandigarh |
Updated: May 30, 2020 9:26:58 am
Under DBT, farmers will have to pay the bill for the power consumed for agriculture purposes. After that, they will get the subsidy in their bank accounts through DBT.(File)

BEFORE IT submits suggestions regarding the Electricity Amendment Bill 2020, recently drafted by the Union power ministry to amend the Electricity Act 2003, a big challenge lies ahead for the Punjab government, which has been providing free power to the agriculture sector. The new bill has proposed providing subsidy on power to farmers through Direct Benefit of Transfer (DBT), which would be different from the prevailing ‘free power’ system. Experts and farmers say that under the garb of DBT, it is a move to stop the free power supply to them. How would this work and what do Punjab’s farmers think of this Bill? ANJU AGNIHOTRI CHABA explains:

What is the current system of power subsidy for farmers in Punjab?

At present, Punjab is supplying free power to 14.16 lakh electricity-run tubewells of the agriculture sector which are getting power through 5,900 Agricultural Pumpset Feeders (APFs). These APFs are metered and the Punjab State Power Corporation charges the state government Rs 5.26 per unit for consumed units recorded in metered APFs. There are no individual meters installed on every tubewell in Punjab, which is among the first states to separate agriculture sector feeders.

Farmers are getting power supply for their Kharif and Rabi crops from these feeders as per the recommendations of the Punjab Agriculture University (PAU), Ludhiana. It is supplied for around eight hours every day in Kharif season and four hours on alternate days during Rabi crop season.

The state government pays around Rs 6,000 crore power subsidy bill to Punjab State Power Corporation Limited (PSPCL) every year under its ‘free power scheme’ to the farming sector.

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What would change under the DBT allowed under the new Electricity Bill 2020?

Under DBT, farmers will have to pay the bill for the power consumed for agriculture purposes. After that, they will get the subsidy in their bank accounts through DBT. A meter would be installed on every individual tubewell.

In Punjab, the consumption per tubewell, having motors mostly with power rating between 7.5 and 12 HP (horse power), is 8,000-9,000 units. So the annual power bill will come to around Rs 46,000 to Rs 48,000, and farmers are required to pay a bill of Rs 4,000 per month.

In Punjab, 67 per cent farmers come under the small and marginal categories with 1-2 hectares land. Paying bills in advance is not possible for them due to debt.

If farmers don’t pay their bills, the department will disconnect their connection, which could lead to several clashes in Punjab between PSPCL employees and farmers’ unions as well as power theft.

“When Punjab government delays paying subsidy bill to PSPCL by 6 months to a year, how will it pay DBT to farmers on time?” asked Vinod Kumar Gupta, a retired PSPCL officer and spokesperson for the All India Power Engineers Federation,

Can it work like DBT on LPG gas cylinders?

It may or it may not, only time will tell, said experts. “The bill suggests the subsidy be paid directly to consumers in cash on the pattern of LPG subsidy. This proposal should be tried in a pilot project and if results are encouraging, only then it should be included in the amendment bill,” said Gupta.

In the agriculture sector, where free or subsidised power is being provided on the basis of a load of pump sets to millions of consumers in every state without any provision of meter on the basis of fixed charges, it is not feasible to provide meters on every pump set up across the country and then give cash subsidy every month after the consumer has paid the bill, he added.

Punjab government’s own DBT scheme titled ‘Paani Bachao Paisa Kamao’ is also working here. How it is different from DBT under the new Bill?

The Punjab government’s scheme is a voluntary one. The farmers who have adopted it need to get install a power meter on their tubewell but are not required to pay any power bill.

Under PBPK, if a farmer has a 10 BHP motor on his/her tubewell, he/she is entitled to a monthly consumption of 2,000 kilowatt-hours (200 units per HP) for four months from June 20 to October 20, covering the period between transplanting and harvesting of paddy. If he/she consumes 4000 to 5000 units from his/her entitlement by using groundwater judiciously, then he/she will earn Rs. 4 per unit for the units saved. For instance, if he/she saves 3000 units out of 8000, he/she will get Rs 12,000 in his/her account through DBT. Also, the government will benefit from it. Instead of paying Rs 5.26 per unit (which is the per unit rate for the agriculture sector) to PSPCL, it has to pay Rs 4 to the farmer per unit for consuming less power and water and Rs 1.26 is government’s saving.

‘PBPK’ was launched in Punjab in 2018 as a pilot project by the PSPCL on six of the state’s 5,900 feeders. Now over 600 farmers have voluntarily enrolled for this on 250 feeders to date and have saved over 6 lakh units and earned around Rs 24 lakh.

The main purpose of PBPK is to save groundwater by using it judiciously because under the traditional system, several farmers are misusing the water by over-irrigating the crops due to free power available to them.

How it will impact PSPCL?

Currently, PSPCL is maintaining only 5,900 power meters installed on feeders but as per the new bill, PSPCL needs to installed electricity meters on every tubewell, which will require at least Rs 1,200 crore along with 10 per cent recurring charges on these annually. PSPCL needs to appoint more manpower to maintain it. It will be a huge burden on PSPCL too.

What do farmers’ organisations think of this?

Farmers organisations say that if the Punjab government agrees to this bill, they will fight it tooth and nail. From where will poor farmers pay such heavy bills when they get income after six months following the sale of their crop, they ask.

Farmers organisations have already planned to hold massive protests on May 30 and 31 at subdivision level in Punjab and will observe ‘Black Day’ on June 1 along with several other organisations opposing the bill.

“From the Punjab government’s statement it seems that it is in favour of the new bill when it says it will benefit 26 lakh farmers against the 10 lakh currently who own tubewells,” said Jagmohan Singh, general secretary, Bhartiya Kisan Union (BKU) Dakuanda, adding that the government should first clarify from where it got the figure of 26 lakh farmers in Punjab. “According to PAU, there are around 12.50 lakh farming households in Punjab and even if the division has taken place among the brothers, they share the water of the same tubewell connections, which are installed in their joint properties.”

“Anywhere in the world, the agrarian sector cannot run without the support of the government as it is the base of every human being who is dependent on farmers’ produce from his/her morning tea to dinner. During the lockdown period, everything was closed except farming activities,” he said, adding that at the time of Covid-19, dependence on the agrarian sector has increased manifold when several lakh daily wagers return to their villages and will work in their small landholdings to earn their living.

“It is like a private company which will benefit private players only,” said he, adding, “We will stop sowing paddy and other crops and will sow whatever is required for our use only.”


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