CHANDIGARH: With only months left for the Punjab Assembly elections, the state government has found itself in a tough spot. An expert panel constituted by the state government to suggest medium and long-term economic strategies for Punjab in the wake of Covid-19 has recommended that the state stop foodgrain procurement and leave the task entirely to the Food Corporation of India (FCI). It has also recommended that the government rationalise power subsidies and shut down two thermal power plants.
However, withdrawing from food grain procurement or rationalising power subsidy would upset farmers whom the government is trying to woo. The panel led by Montek Singh Ahluwalia called power subsidy an “unsustainable fiscal practice, which will harm future generations and cannot continue indefinitely.”
Punjab’s power subsidy bill including free electricity to farmers is pegged at more than Rs 10,000 crore.
Notably, in its first report, the panel had described free power to farmers as “highly regressive” and had said it has limited the “government’s ability to incur other expenditures essential for Punjab’s development.” The panel also called on the government to shut down two thermal power plants that have completed their economic life span and are now producing coal at a much higher cost.
“We would reiterate our recommendation in the first report that Punjab State Power Corporation Limited should shut down two thermal plants that produce power at a much higher cost than alternatives available to PSPCL, once these plants have completed their economic life span. Earlier, PSPCL had shut down Bathinda thermal Power plant as well. We however recommend that for these two plants, PSPCL should carry out advance planning to recover the best price for the assets and to ensure a smooth transition to other power sources,’’ the report said.
The panel, which includes leading economists, was set up last year by the state government to frame a medium and long-term post-Covid economic strategy for Punjab. The panel said that the state government could reduce losses on foodgrain procurement operations. “Given the large presence of FCI in the procurement process, the State government should gradually withdraw,” the panel said. Among other recommendations, the panel suggested an increase in budget allocation for the healthcare sector by 20% and setting up of Punjab Enterprise Promotion Panel.