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Myth and reality of the `powerful' farmer

Harish Damodaran

The farming community is often pilloried for being the main stumbling block behind power sector reforms. The agriculture sector today officially accounts for a third of total electricity consumption in the country -- it used to be around a quarter till t he late 1980s -- and over 70 per cent of the annual gross subsidy of Rs 36,000 crore borne by State power utilities.

With no State charging farm tariffs that recover even half of the average cost of supply and some, notably Punjab and Tamil Nadu, even providing electricity free to rural users, it is no surprise that the 'powerful' farm lobby is seen as the real cause f or the near-bankruptcy of State electricity boards (SEB).

But if one goes by the findings of a recent World Bank study (India: Power Supply to Agriculture), the picture is not as straightforward as it seems. While agriculture is, no doubt, a significant user of power, it does not, however, consume as much as of ficial estimates would suggest. What the study has done is to question the very methodology employed by SEBs for estimation of electricity consumption by the farm sector.

The flaw, it points outs, arises from the fact that electricity sales to farmers are rarely metered. Andhra Pradesh, Punjab, Tamil Nadu and Karnataka do not meter any agricultural connections. Haryana has around 360,000 agricultural consumers, of which o nly 20 per cent of these connections are metered. Rajasthan is the only State that has nearly half of its agricultural connections metered, but they account for only a fifth of total electricity sales to farm consumers.

Instead of metering every unit of electricity consumed, what the SEBs normally do is to charge a 'flat' rate linked to the horsepower (hp) capacity of irrigation pumps. This practice is justified on grounds that agricultural consumers are scattered in re mote rural areas and the whole exercise of metering, billing and collection tends to be administratively cumbersome.

In Haryana, the flat rate is based on the depth of the borewell: Those having to access water from depths of up to 100 feet have to pay a fixed rate of Rs 65 per hp per month, which progressively reduces to Rs 50, Rs 40 and Rs 30 for borewell depths of 1 01-150, 151-200 and above 200 feet respectively. The ostensible idea here is to compensate farmers in southern districts such as Bhiwani and Mahendergarh, who are handicapped by low groundwater-table levels, unlike their counterparts in the northern part s of Karnal or Kurukshetra.

In AP, there is no such direct link of tariffs to borewell depth. If a farmer in a non-drought prone area owns a pump of capacity up to 3 hp, he has to pay a tariff of Rs 150 per hp per year, which rises to Rs 250, Rs 350 and Rs 450 for 3-5, 5-10 and abo ve 10 hp motors respectively. For the drought-prone areas in Telangana and Rayalseema, the corresponding annual slabs are lower at Rs 100, Rs 200, Rs 300 and Rs 400 per hp, respectively.

In the absence of metering, how then is power consumption by farmers estimated? What SEB officials do is to `assume' a figure for electricity consumption per pumpset based on some broad assessment on the number of hours of use. And this is where the poss ibility for overestimation arises.

In Haryana, for instance, the Haryana Vidyut Prasaran Nigam Ltd (HVPNL) has taken average annual consumption per pump at 12,469 units (Kilowatt-hour) during 2000-01, which, in turn, translates into a gross agricultural consumption of 4,400 million units, accounting for about 46 per cent of total electricity consumption in the State. But, according to the World Bank study, the consumption standard assumed by HVPNL is on the high side.

To get a more precise estimate of agricultural power use, the Bank, in November 1998, initiated a programme to monitor the actual electricity consumption of a `representative sample' of 584 farmers, connected to 25 feeders covering the State's five agro- climatic regions. Consumption was monitored through electronic meters for a whole crop year covering the summer, kharif and rabi seasons, with HVPNL staff taking fortnightly meter readings.

The results were revealing: The average electricity consumption per pump in the metering study worked out to only 8,150 units or 35 per cent below the official standard of 12,469 units. Further, the average annual pump usage by farmers was only 1,500 hou rs, as against the HVPNL's figure of 2,463 hours for unmetered customers. If the true standard norm of 8,150 units was employed, the agriculture sector in Haryana consumed only 2,876 million units and not 4,400 million units. The difference of 1,524 mill ion units represented nothing but unaccounted power theft masquerading as consumption by non-existent farmers! The value of these spurious sales, taking supply cost at Rs 3.7 per unit, came to an incredible Rs 565 crore!

If the 1,524 million units did not represent genuine consumption by the farm sector, but theft and pilferage taking the form of handouts to `invisible' farmers, it implied that the transmission and distribution (T&D) losses in the State were much higher than the official estimate of 5,607 million units. The actual T&D losses would be 7,132 million units, amounting to almost 47 per cent of total electricity available for sale of 15,204 million units and not the official figure of 37 per cent. Further, it followed that agriculture's share in electricity consumption was only 36 per cent and not 46 per cent.

There is reason to believe that what the Bank study has revealed for Haryana is also true in respect of other States. Table 2 gives the official State-wise figures for agriculture's share in total electricity consumption. It is, indeed, difficult to beli eve how the farm sector in Madhya Pradesh, Rajasthan, Gujarat, Maharashtra and Karnataka can account for 46 per cent, 38 per cent, 41 per cent, 31 per cent and 44 per cent of power consumption, when the share of irrigated area to the gross cropped area i n these States are only 25 per cent, 30 per cent, 34 per cent, 14.5 per cent and 25 per cent, respectively.

Also, the cropping intensity -- the number of crops taken per unit area in a year -- in these States is very low, ranging from 1.15 in Gujarat to 1.3 in MP. This is unlike the situation in Punjab and Haryana, where the high proportion of irrigated area ( 92 per cent and 79 per cent) and cropping intensity (1.9 and 1.7) gives `prima facie reason at least to presume agriculture's disproportionate share in electricity consumption.'

However, considering that the official estimates are exaggerated even in the case of Haryana, one wonders what would be the extent of overestimation for Maharashtra or Gujarat, which also happen to be highly industrialised States with large urban centres such as Mumbai, Pune, Ahmedabad, Vadodara and Surat!

This aspect of deriving realistic estimates of farm electricity use assumes importance, more so when the World Bank study has inferred that utilities in Andhra Pradesh alone stand to notionally lose Rs 120 crore for every percentage point underestimate o f T&D losses hidden under the head of `agricultural consumption'.

If over and above this, one were to factor in irregular power supply (non-availability during peak period of agricultural operations), delays in repair of burnt-out transformers (about 26 per cent of transformers `fail' every year in Haryana, with averag e repair time ranging from 6-10 days) and the extra cost of rewinding of burnt motors and use of alternate diesel pumps, it is clear that the farmer is neither drawing excess electricity nor is he being unduly subsidised. The Indian farmer is `powerful' only on paper and in official records.