The Hindu Business Line : Punjab: The politics of power

Punjab is facing the tyranny of the elements, clumsiness in the Centre's policies and the misdirected forthrightness of the Chief Minister, who has decided to stop free power to farmers. Conceding that farmers get subsidies on account of power supply, Sharad Joshi thinks the Punjab move could have waited, and looks at the politics and economics of free electricity to farmers.

The Punjab Chief Minister, Capt. Amarinder Singh... Making farmers pay for power is equitable, but will it be fair?

THE Punjab farmer has been in the news recently on the issue of the minimum support price (MSP) of paddy. The Centre decided to keep the MSP for paddy unchanged at last year's level. The farmers were enraged, as this year, the drought had escalated the cost of production of paddy by more than a hundred rupees per quintal. The Centre eventually rolled back, albeit partially, on its stance and announced a paltry increase of Rs 20 per quintal. This did not satisfy the paddy growers who broke out into rasta-rokos, rail-rokos and dharnas all over Punjab and Haryana.

The Punjab Chief Minister, Capt Amarinder Singh, who, in the fashion of his party colleague from Karnataka, Mr S. M. Krishna, called all-party consultations, offered personal dharna in front of the residence of the Prime Minister and threatened to organise mass demonstrations in Delhi.

Punjab agriculture is in the news once again. The actors are the same: Farmers, Capt. Amarinder Singh and the Centre; but the roles are totally reversed. The Akali Dal, led by Mr Parkash Singh Badal, had made an electoral promise in 1997 that electricity will be supplied free for agricultural pumps. Mr Badal implemented the promise with alacrity and sustained the strain caused thereby throughout his tenure.

In the last Assembly elections, the Akalis had bragged about free supply of electricity as conclusive proof of their pro-farmer credentials; the Congress had not taken any position on the issue. The Congress(I), which kick-started the economic reforms and liberalisation in the early 1990s, has been having second thoughts and has started talking of the need to give liberalisation a pro-poor tilt. This concern for the poor did not stop Indira Gandhi from dispatching missives to the Chief Ministers belonging to her party, ordaining that all subsidies on farm power be scrapped.

The suave and energetic Congress Chief Minister, Capt. Amarinder Singh, opened up Akali cupboards of skeletons, exposing corruption in the Punjab Public Service Commission and elsewhere. The stage thus set, the Chief minister of Punjab, an ex-maharaja of Patiala, and a renowned shikari, has trained his guns on free electricity to farmers.

The farmers are, of course, aghast. They never thought they would one day have to pay for electricity. The farm unions are not going to take it lying down. Captain Amarinder Singh is too adroit a politician not to have anticipated the hostile reaction of farmers but he had to make the farmers swallow the bitter pill sooner or later if only to score some brownie points with the High Command. Subsidies are bad per se.

The absence of accountability in the supply of electricity produces chain reactions, which do nobody any good. Farmers tended to over-irrigate their crops using poor quality motors that the manufacturers rolled of to match the requirements of agricultural users, who are not interested in power economy.

Further, free electricity had made the farmers in Punjab subservient to the governmental favours and, consequently, had lost a part of their spirit of enterprise.

Punjab is facing, at one and the same time, the tyranny of the elements, clumsiness in the Centre's policies and the misdirected forthrightness of the Chief Minister. Of course, agriculture is a State subject and so is electricity. In principle, the State governments, under the Constitution, are free to make any decisions they like on the matter of agricultural power supply. Unfortunately, power constitutes the single largest item of input expenditure for a farmer, and the Centre lords over all that determine the economics of farming including the supply of inputs and post-harvest treatment including marketing and processing of all outputs. The Centre is the final authority in deciding the level of domestic support, restrictions on imports as also restrictions/subsidies on exports. Power tariff and the entire gamut of issues relating to domestic support cannot be delinked and regulated in mutually contradictory ways.

Captain Amarinder Singh's argument, prompted by the Congress Working Committee, that led to the decision to stop the free supply of electricity, is simple and understandable. The farmers do not pay even the average cost of generation and distribution of supply and, in all equity they should be made to pay a good part of the average cost of production. The question is: Does the farmer receive the average electric power? Certainly not. He receives only the residual supply when it is not needed by anybody else — neither by the industry nor by the urban consumers. That is the reason why the farmers of Punjab and Haryana have to stand in chilly winter nights to water their wheat fields.

The residual supply by its very character is uncertain and of widely fluctuating voltage that damages not only the motors and the pumps but also often the standing crops. Does any State electricity board take into account the losses caused due to the deficiency in the quality of supply? It is very probable that if these loses are deducted from the power bills, the farmers will come out creditors rather than owing to the Electricity Boards.

Conceding that the farmers do receive some subsidies on account of power supply, the fact remains that Indian agriculture suffers from a hefty negative subsidies on account of prices. The amount of subsidy allegedly received for power supply, as also fertilisers, water and credit, all together constitute only a small fraction of the overall negative subsidy imposed on the farmers because of the Centre's policies.

No action can be started to reduce the so-called subsidy on power without simultaneously taking measures to remove the negative subsidy.

Lastly, the clinching question remains: Are the farmers paying less than what is computed in the cost of production of the Commission for Agricultural Costs and Prices (CACP) on account of electric power?

The Government has never disclosed the rates of electricity tariff computed into the calculations of the CACP. It continues its Goebbels-like campaign of farmers being the main culprits for the poor health of the Electricity Boards. The talk of the average cost of production is entirely irrelevant.

The farmers would be willing to pay any rate on power supply provided they are shown convincingly that it is not higher than the tariff taken into account by the CACP.

There remains the matter of political wisdom. Was this the right time to push even a long-delayed right thing? Punjab is suffering from an unprecedented drought; the farmer is, as it is, unable to cover the escalated costs of production because of the inadequate support prices; the nation is expecting the Punjab and the Haryana farmers to break the wheat-paddy vicious cycle and diversify into production of oilseeds; the cotton farmer in Punjab has not been given a genetically modified seed and the cotton crop stands withered.

The situation is so bad that the Punjab Chief Minister is offering dharnas, demonstrations and all. No one can defend subsidies. There are no good subsidies. But, if the subsidy regime has prevailed for long, the de-addiction therapy has to start at an appropriate occasion and be carried out in a manner that would not prove to be counterproductive. Had Captain Amarinder Singh approached the problem like a statesman that he is, delinking it from the Party High Command injunctions, as also avoided the temptation of scoring off his arch rival, Mr Parkash Singh Badal, he would have decided to put up for some more time with the financial burden of farm power subsidy that, after all, is not much bigger than the amounts of cash seized in the premises of the former Chief of the Punjab Public Services Commission.

(The author is Founder, Shetkari Sanghatana. Feedback can be sent to sharad@mah.nic.in)

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