Awaiting Cabinet OK: a policy to do away with power subsidy except for the BPL

It suggests that the states could levy an Electricity Duty, permissible under the Constituion, in order to subsidise the consumption of these weaker sections like BPL households, small and marginal farmers.

The policy, a product of The Electricity Act of 2003 and UPA government’s National Common Minimum Programme, now awaits Cabinet approval.

The attempt, says a paper sent to Prime Minister’s Office this month, is to recover costs through gradual reduction in existing cross-subsidies to make the power sector sustainable. Heavy cross-subsidies had resulted in very high tariff for industrial consumers, thereby making Indian industry uncompetitive, it argues.

At the same time, it suggests the minimum support level for ‘very poor category’ to make electricity affordable and ensure that all households have access to electricity in five years.

The State Electricity Regulatory Commission (SERC) would be the authorised body to identify the targeted sections and the actual subsidy provision which would be reviewed after five years.

The SERC would also continue to be the decision-making authority on tariff issues. The NEP, finalised after discussions with states, does not include their demand that SERC consult the state governments before deciding on power tariff.

‘‘Prior consultation on tariff order would go against the principle of distancing actual tariff determination from the poltical executive and the compulsions of competitive political populism,’’ reasons the Power Ministry.