Business Today

Shock treatment

The BJP promises farmers free power for votes.

Print Edition: June 1, 2008

The BJP has rushed where its adversaries fear to tread. The party has promised free power to farmers if voted to power in Karnataka. That was a commitment that not just the Congress but even the JD(S), which claims to represent farmers, deftly eschewed in their poll manifestoes.

BJPs Yeddyurappa: Promises to keep
B.S. Yeddyurappa
Karnataka has 17.5 lakh irrigation pump sets (IP sets) and adds 25,000 new ones every year. The BJP’s promise flows from its leader B.S. Yeddyurappa’s own understanding of state’s finances—he was Finance Minister in the JD(S)-BJP coalition regime before a divorce, which explains the elections now. At a subsidised tariff of 40 paise per unit, the BJP loves to believe its promise, if implemented, would cost just under Rs 800 crore a year. But it ignores the fact that the actual power bill works out much higher. The average cost of power supply has climbed to an unsustainable Rs 4.30 a unit as against recovery of just Rs 3 a unit from consumers. The government supports the five stateowned electricity supply companies (Escoms) with Rs 1,800 crore a year, but that has not helped much.

The BJP’s promise, if kept, will ruin the Escoms and drive away investors. No investor would want to invest in a state saddled with a sick power sector, says a director at one of the Escoms. According to him, each IP set energised imposes a recurring annual burden of about Rs 26,000 on the government. Onethird of the power Escoms buy goes towards meeting agriculture load, while a fourth is lost in transmission and distribution. Supply to the farm sector is supposed to yield Rs 60 crore a month, but few consumers pay. The state’s electricity regulator encourages switching off supply to defaulters, but politicians in power have never allowed that. Thus Escoms are together left with only 40 per cent of power they have bought. Result: Industrial and commercial consumers are hit by way of steep tariffs and a 13 per cent shortage in peak hour supply. Professor M. Govinda Rao, Director, National Institute of Public Finance and Policy, and also a member of the PM’s Economic Advisory Council, ridicules the BJP’s double standards.

“The same party in Gujarat told voters it will supply quality power to farmers for 24 hours if voted, but will charge for it. If Narendra Modi (Chief Minister of Gujarat) could say so and come to power, what prevents the BJP from doing that in other states,” he wonders.

K.R. Balasubramanyam

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