DNA Edit: Holistic view needed - Agriculture is pulling down power sector reforms

Maharashtra, otherwise among the more developed states in India, is a classic case of why the power sector has not taken off in India despite two-and-a-half decades of economic liberalisation. Consumers are simply not prepared to pay for using electricity and the country’s mammoth power distribution system is in a mess.

The Maharashtra government may have to bail out its cash-strapped electricity distribution company MahaVitaran in view of rising arrears, which come mainly from agricultural consumers. MahaVitaran’s total arrears have increased from Rs 32,627 crore in 2017-18 to Rs 40,278 crore in 2018-19. Of this sum, the rise in dues from agriculture consumers alone is Rs 30,199 crore!

MahaVitaran’s total consumer base of 2.60 crore includes 43 lakh agriculture consumers. There has been a sharp growth in electricity usage in India’s agriculture sector, especially since the 1980s with consumption rising from 3,465 million units (mu) in 1969 to 173,185 mu in 2016. This is supplied either free or at subsidised rates, and a large part of it is not metered.

Not surprisingly, a major push of power sector reforms has been towards the elimination of subsidies and increasing tariffs for agricultural consumers. But, it has not helped because neither the farmers, nor the discoms are happy.

The discourse on non-payment of bills largely ignores the crucial role of agriculture in the country and the strong linkages between electricity, water and agriculture. The importance of the linkages is seen from the fact that all electricity supplied to agriculture is used for pumping groundwater for irrigation.

Close to 85% of pumping energy used in agriculture comes from electricity and the rest from diesel. There is a clear case for technological upgrade to beat this vicious cycle. It is time for a comprehensive study of the interlinked electricity, water and agriculture sectors that will help policy makers arrive at a holistic conclusion.