Tuesday, November 13, 2012

Farmers need to look beyond free electricity!


Agri subsidies were started with the intention of helping out the farmer financially. However, in today's day and age, these subsidies are putting a phenomenal strain on the existing infrastructure we have in our country. Additionally, people forget the value of a resource when it comes by free. Personally, I am not a big fan of subsidies like free power for precisely the reasons elaborated in the article below.. 


 There has been a change of guard at the power ministry and Jyotiraditya Scindia, the new man in charge, has described his task as daunting. To simplify the many complexities, it's worth keeping in mind an adage that's particularly apt for rural India: Nothing is more expensive than no power.
While on one hand there are thousands of villages that still remain to be electrified, on the other even the ones that have been electrified, get power for a mere four to five hours per day, and that too mostly at night time.

The stark reality is that due to the short-sightedness of our policymakers and the political class, we are unable to mobi-lise the national consensus needed to do away with subsidised power to the agricul-tural sector. The decision-makers fail to realise that more than subsidies, it is round-the-clock and quality power supply that holds the potential to completely transform life in rural India.
It is worthwhile to mention here that agriculture, which accounts for over 25% of the electricity consumption, contributes to a mere 5% of the revenue. Inadequate tariffs on one hand and high technical and commercial losses on the other have completely destroyed the financial health of all state utilities.

Aggregate loss in the year 2012 is estimated at a whopping Rs 1.2 lakh crore (1.5% of GDP). This poor financial health has resulted in inadequate investment in the entire generation, transmission, distribution value chain - which in turn has impacted the overall quality and reliability of the supply.

The entire  article can be accessed here

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