27 out of 36 states and union territories are providing at least subsidized power to consumers Data from the Ministry of Power shows that ₹1.32 trillion was spent across the country in the 2020-21 financial year alone. Madhya Pradesh, Rajasthan and Karnataka kept the highest electricity subsidy bill, which is accounted for 48,248 crore or 36.4%.
Delhi has seen an 85% increase in its subsidy expenditure between 2018-19 and 2020-21 1,699 crore in 2018-19 3,149 crore, the second highest among all the provinces, shows an analysis of three years’ data. Manipur saw the biggest jump of 124% in power subsidies in these three years, though what led to this increase? 120 cr to 269 crores.
The data assumes significance as the Supreme Court is hearing a PIL that wants the registration of political parties be canceled and their election symbols confiscated for “irrational freebies” ahead of elections. The top court had on Wednesday said that no political party wants a free debate in Parliament as all want it to continue, even as the central government called such a hand “the road to an economic disaster”. and urged the Election Commission. India to find ways to deal with them.
Prime Minister Narendra Modi on Saturday asked states to clear dues of power utilities 2.5 trillion, and termed the culture of subsidies “a serious disorder” in Indian politics.
“People will be surprised to know that dues are pending on various states 1 lakh crore. They have to give this money to the power companies (generation companies). Electricity distribution companies (discoms) owe more than 60,000 crores. These companies are not even able to raise the money committed for subsidy on electricity in different states. This is more than even the outstanding 75,000 crore,” the Prime Minister had said.
Madhya Pradesh ruled by Bharatiya Janata Party (BJP) has spent 47,932 crore between 2018-19 and 2020-21. This is only going to increase now as the state government announced on May 24 that it would set aside an additional amount. 16,424 crore on account of giving electricity subsidy to farmers. the state already has Rs 5,582 crore subsidy scheme for domestic consumers.
“If you look at Madhya Pradesh alone, its tariff subsidy amount booked in 2020-21 was 19,595 crores. In 2022-23, with his latest announcements, the state budget allocation on power subsidy is going to go up 22,800 crore,” said a power ministry official requesting anonymity.
On Thursday, dues of discoms in Madhya Pradesh were due 8,190 crore to the generating companies, according to the PRAAPTI portal of the Union Power Ministry. PRAAPTI is short for Payment Confirmation and Analysis in Power Purchase to bring transparency in generator invoicing.
State power department principal secretary Sanjay Dubey said: “We are already supporting the Center on this. owed more than 8,000 crore from 2019-20 and we are paying it under late payment surcharge. The first installment has been paid. We have paid all the dues of last year and this year also we are paying it regularly so MP is not a defaulter state.
Similarly, Congress-led Rajasthan, which in its 2022-23 budget announced additional free electricity up to 50 units for domestic users consuming up to 100 units per month, has spent Rs. 40,278 crore in the last three years and 6,545 crore in 2020-21 alone. Dues of discoms in rajasthan 4,201 crores to various gencos.
Cabinet Minister Pratap Singh Khachariawas said that there was 50 units of free electricity for 36 lakh beneficiaries. “What the government is doing is for public welfare works and is acting as a trustee and not a trader,” he said.
“The first right of a person is bread, electricity and water. We are not like those who tax flour but work for the public. After the Covid-19 pandemic, lakhs of people could not pay their bills, and the subsidy is for such families,” he said.
Goa and Kerala are the new entrants who started offering power subsidy in 2020-21, while Sikkim and Tripura introduced them in 2019-20, the data showed. Moreover, out of the 27 provinces that offered subsidies, only five saw a marginal reduction in spending, while Gujarat, Telangana, Meghalaya and Jammu and Kashmir kept their budget allocations on power subsidy the same during the three-year period.
Subsidy expenditure for all other states increased during the same period, the data showed.
India is grappling with a severe coal crisis, resulting in significant stocks of domestic thermal power plants. Since March, the power ministry has asked states to ensure basic payment discipline to Coal India, Gencos and discoms to ensure sustained power generation.
The Aam Aadmi Party (AAP) has announced plans to replicate its Delhi model of free electricity for low-consumption users in Gujarat and Himachal Pradesh, both ruled by the BJP. AAP was the first to launch a massive power subsidy scheme in Delhi after coming to power in 2015. As per official estimates, 86.6% of the domestic consumers have benefited from this scheme. The scheme has now been implemented in Punjab after the Arvind Kejriwal-led party won the assembly elections in the neighboring state earlier this year.
Several political parties, including the BJP and Congress, have made similar election promises in the lead-up to elections in various states.
Shalu Agarwal, Senior Program Lead at Council on Energy, Environment and Water, a think tank, said that for a growing economy like India, electricity is a key driver and the country needs to decarbonize its energy mix to meet the growing demand for electricity. Is required.
“To solve the deteriorating financial health of state power distribution companies, it becomes important to clear their pending dues of power utilities (be it tariff subsidy or outstanding bills of government departments),” Agarwal said. “This is about 70% of the receipts expected by the discoms. States and discoms should prioritize action on this front.
“States can start by clearing pending subsidies and departmental dues through advance deduction from budgetary allocation in a phased manner. However, fiscal constraints can pose challenges,” she said. “It is important to rationalize and target subsidies to ensure that discoms come out of the vicious cycle of arrears and reform packages.”
Officials in Karnataka could not be reached for comment.