VIJAYAWADA: The state government on Tuesday said it would introduce direct benefit transfer (DBT) in case of the subsidy being extended to agricultural power consumers in the form of free power. The decision has been taken after the Centre mandated implementation of DBT in lieu of free power, among other performance-linked reforms, to avail additional borrowing as part of reforms under Aatmanirbhar Bharat Abhiyan. According to an order issued by Energy Secretary Srikant Nagulapalli on Tuesday, the government will credit the entire amount of power consumed by agricultural connections in the beginning of the month and beneficiaries will pay the power distribution companies.
Smart meters for agricultural connections
Smart meters will also be installed for agricultural connections, wherever possible. In other places, IRDA meters will be installed.The state government is offering free power to 17.55 lakh agricultural connections at a cost of Rs 8,353.6 crore. The annual consumption by the connections is 12,232 million units. The subsidy per agriculture connection per year stands at RS 47,60. Earlier, discoms used to supply free power and the government released the subsidy amount to the power companies.
Now, the system would be dispensed with and the said amount will be directly credited into the accounts of the farmers. Implementation of the DBT would also mean the state government will have to release the money upfront every month. But officials are confident as the government has been releasing the subsidies without any delay. However, Tuesday’s order also said there should not be any interruption in the power supply even if there was a delay in payment by the farmers.
It may be recalled that the Centre, as a part of bringing in reforms in the power sector to make it sustainable, had announced various performance-linked initiatives in May this year. It had announced that the power sector reforms would give States a freedom to borrow 0.25 per cent of its GDP more. Of the 0.25 per cent of GDP borrowing linked to power sector reforms, the States can avail 0.15 per cent if they roll out the DBT to all farmers at least in one district by December 31, 2020, 0.05 per cent each if they reduce discoms’ aggregate technical and commercial (ATand C) losses and the gap between average cost of supply and average revenue realisation (ACS-ARR gap).
Based on the performance of the above three parameters, the power ministry will facilitate additional borrowing by Jan 31, 2021, according to the letter sent to the States dated May 17. As per the government’s plan, fresh accounts for farmers will be opened to transfer the credit. Committees at village, mandal, division, discom and state levels will be constituted for the smooth implementation of the initiative. These committees, besides creating awareness and redressing grievances, will also be responsible to conduct enrolment for new connections.
States against Act
The DBT of subsidies to beneficiaries is one of the amendments proposed to the Electricity Act, 2003. Many States, including AP, have opposed the Electricity (Amendment) Bill, 2020, stating that it was against the federal spirit of the Constitution.
Subsidy may rise
Even though the agriculture subsidy for the year 2020-21 is expected to be around Rs 8,353.6 crore, the government said it will increase manifold in the coming years as the demand is expected to rise further as the plan is to continue the free power initiative for 30 years.