Punjab farm power subsidy benefits big farmers more than the small ones

While the state’s collective power subsidy bill for marginal, small and semi-medium farmers stands at Rs 2,653 crore, the big and medium farmers get free power worth Rs 3,407 crore every year.

Records accessed by The Indian Express revealed that as per Agriculture Census 2015, 10,92,713 farmers operate 13,51,692 tubewells (as on March 2017) in the state, and the subsidy to each tubewell costs Punjab Rs 44,835 per year roughly as the government’s free farm power bill had crossed Rs 6,000 crore last year.

More than 1.54 lakh marginal farmers, with a farm side of up to 2.5 acres, operate 89,212 tubewells. This means that one in two marginal farmers has a tubewell. The subsidy to this category costs the government Rs 400 crore.

Small farmers with landholdings between 2.5 and 5 acres number 2,07, 436 and own 1,60,581 tubewells. The free power subsidy to these farmers is Rs 720 crore.

A total of 3,67,938 semi-medium farmers with landholdings between 5 and 10 acres own 3,41,978 tubewells. Giving free power to these farmers costs the state Rs 1,533 crore. In all, these three categories of farmers account for Rs 2,653 crore of the total farm power subsidy.

The medium farmers with landholdings between 10 and 25 acres number 3,05,220 and have 5,22,294 tubewells, which are 2,17,074 more than the number of farmers. The state shells out Rs 2,342 crore as power subsidy to these farmers.

A total of 57,707 farmers own more than 25 acres each and operate 2,37,627 tubewells. Each farmer in this category roughly has four tubewells. The subsidy to this group costs Rs 1,065 crore. Together, the big and medium farmers cost the state Rs 3,407 crore in farm power subsidy.

Not just the Montek Ahluwalia-led Group of Experts, but the state’s Finance Department too had given a representation to the Chief Minister Amarinder Singh in December last year stating the subsidy should be rationalised and if the state withdraws subsidy from the medium and large farmers alone, it would be able to save 56 per cent of amount of subsidy at Rs 3,407 crore annually. The decision was, however, deferred.

But even after the GoE report, Amarinder made it clear that he would not withdraw free farm power as long as he is in the government. He categorically stated that he would not accept any recommendation from any expert.

The opposition also trained its guns on Amarinder soon after the Montek panel report and threatened to launch a movement in protest.

After coming to power in Punjab, Amarinder’s government had started a pilot project of providing direct benefit transfer of free power to farmers by directly depositing the cash on account of subsidy in their accounts asking them to pay the bills directly from their accounts. The scheme was adopted by farmers in several feeders. It was expected that the government would extend the project to other feeders across the state, but it was not done.

Noted economist Dr SS Johl said he has repeated many times that the subsidy should be rationalised, but all political parties are parroting the same thing. “Amarinder Singh is also repeating what Parkash Singh Badal used to say that he will not withdraw the subsidy. I have pleaded with them so many times and have given them the alternatives also. I have told them several times not to give Rs 6,000 crore. It should be as much as the state exchequer is able to afford. I have advised them to give development and infrastructure subsidy. “

He added: “I have told them to calculate the subsidy for every acre and then put this money in the accounts of the farmers. It is doubly beneficial. It will not only reflect on the input cost of the farmers, as they will be paying the bill from their account, thereby increasing the market price of their produce but will also help many of those who do not have tubewells and have to buy water. Also, subsidy can be given to small and marginal farmers. This will not only help save power but also the precious water. Otherwise the farmers will never switch over to sprinkler or drip irrigation.”

Dr Johl said the subsidy being given by the government in the form of free power was not calculated in farmers’ input cost. The benefit was going outside Punjab as the customers of 22 million tonnes of grains were outside the state. He added: “Amarinder had come to me. I had suggested him this direct benefit transfer. But nobody is willing to take a call. They all think this will affect them in the elections. They do not realise that this does not get them votes. Had this been true then why did Badal lose in 2002 elections though he had introduced free power for the first time? ”

Punjab’s free farm power burden

Marginal farmers (upto 2.5 acres) – Rs 400 cr

Small farmers (2.5 to 5 acres) – Rs 720 cr

Semi-medium farmers (5 to 10 acres) – Rs 1,533 cr

Medium farmers (10 to 25 acre) – Rs 2,342 cr

Big farmers (above 25 acres) – Rs 1,065 cr

Total cost every year – Rs 6060 cr