For two decades or more, successive governments have tried weaning away farmers in Punjab from growing paddy. Their efforts have borne little fruit, as the area under this water-guzzling crop has only gone up from 11.83 lakh hectares (lh) in 1980-81 to 20.15 lh in 1990-91, 26.12 lh in 2000-01 and 30.46 lh in 2016-17.
The primary culprit here has been free power supply to farmers. It has led to groundwater overdraft and incentivising cultivation of paddy over maize, cotton, groundnut and other less water-intensive crops (which also don’t benefit from minimum support price-based state procurement). The policy to not charge for electricity used in farm pump-sets was initiated in February 1997 by the then Shiromani Akali Dal government under Parkash Singh Badal. The Captain Amarinder Singh-led Congress regime, which took over in 2002, introduced a nominal flat tariff of Rs 60 per BHP (British horsepower) for unmetered agricultural connections and Rs 0.57 per unit (kilowatt-hours) on metered electricity. But there was hardly any recovery from farmers. The subsequent Badal administration, in January 2010, again levied a flat Rs 50-per-BHP tariff for agricultural producers, only to withdraw it 10 months later.
The end-result: The number of electric tubewell pump-sets in Punjab zoomed from around 28,000 to 79,400 between 1980-81 and 2000-01, and further to 11.06 lakh in 2010-11 and 13.5 lakh by 2016-17. Today, 112 out of the state’s 138 blocks fall under the “dark zone”, with over-exploited, critical or semi-critical groundwater resources. The only worthwhile initiative in recent times has been the Punjab Preservation of Subsoil Water Act of 2009, which bars any nursery sowing and transplanting of paddy during the peak summer before May 15 and June 15, respectively.
But more promising is an experiment, launched as a pilot project in three villages of Fatehgarh Sahib — Chaur Wala, Bhamarsi and Bhagrana — by the current Amarinder Singh dispensation. Under it, digital meters will be installed on the tubewells belonging to 990 farmers of the said villages. But the interesting part is that the state government, instead of compensating the Punjab State Power Corporation Limited (PSPCL) for its supplying electricity free of cost, will make a direct benefit transfer (DBT) of Rs 48,000 to each of the chosen farmers’ bank accounts. These farmers would, in turn, have to clear their dues to the PSPCL from the DBT amounts credited, based on the actual number of units consumed.
“We will provide a fixed annual DBT subsidy of Rs 48,000 per tubewell. If a farmer’s electricity bill against the tubewell connection turns out lower, he will be allowed to retain the surplus amount,” said Manpreet Singh Badal, Punjab’s Finance Minister. Farmers, according to him, may gain monetarily, as their tubewell power bills are likely to be within the Rs 48,000 cash subsidy being transferred.
Punjab has roughly 5,900 rural electricity feeders, supplying eight hours of uninterrupted power to the state’s 13.5 lakh tubewells during the paddy cropping season (from June 15 to September 30) and 3-4 hours for the rest of the year. The tubewells have mostly motors with power rating between 7.5 and 12 BHP.
The subsidy payable to PSPCL is calculated by taking the number of units consumed by the state’s tubewell pump-sets and multiplying this with the tariff for agricultural power. The latter is now fixed at Rs 5.06 per unit, while the annual consumption per tubewell is reckoned at 8,000-9,000 units.
“There’s no clear estimate of how many units farmers are really consuming. The numbers we have is based on supply from the feeders and not at the point of consumption. Also, while about a fifth of the state’s tubewells have electricity meters, the fact that farmers aren’t paying for the power could be overstating their actual agricultural consumption requirement,” admitted a PSPCL official. Even assuming consumption at 9,000 units, the resultant power bill of Rs 45,540 would be less than the DBT subsidy of Rs 48,000.
The Punjab government has signed an MoU with the Abdul Latif Jameel Poverty Action Lab (J-PAL), a research centre affiliated to the Massachusetts Institute of Technology, for the DBT project. J-PAL — along with experts from the World Bank, Punjab Agricultural University and the state’s agriculture, irrigation and soil conservation departments — will undertake a study of actual power use by farmers and how it might change once they start paying out of a fixed DBT subsidy credited to their bank accounts.
“We believe they will cut down on consumption, as there is an incentive now to save as much as possible from the Rs 48,000 amount. The tendency to waste is higher when you get something free without any upper cap. All this will ultimately promote more judicious use of groundwater. The farmer may even shift to growing crops that require less water,” noted Jasbir Singh Bains, Punjab’s Director of Agriculture.
The Punjab government plans to take up the new project from the coming kharif season. “We will install the special meters on all the 990 tubewells by early May, before the start of paddy nursery sowings. This would enable monitoring of consumption right through the agricultural season,” added the earlier quoted PSPCL official.
For the state government, there may be no financial savings as such from the DBT project. Even if the fixed amount of Rs 48,000 is extended to all the 13.5 lakh tubewells, the outgo of Rs 6,480 crore is what it is anyway shelling out as power subsidy to PSPCL.
Farmers’ organisations are, however, viewing the latest initiative with suspicion. “Their real agenda is to discontinue the power subsidy for agriculture. DBT is only a step in that direction. Amarinder Singh’s government has already washed it hands off the Congress party’s Assembly election promise to waive farm loans. They are restricting this at present only to cooperative bank loans of up to Rs 2 lakh to marginal farmers,” alleged Jagmohan Singh, general secretary of the Bhartiya Kisan Union (Dakunda Group).