Punjab’s power subsidy set to touch whopping ₹20k-cr next fiscal

Mar 01, 2023 01:17 AM IST

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The power subsidy payable by Punjab Government to power corporation may cross a whopping ₹20,000 crore as per the revised estimates of Punjab State Power Corporation Limited (PSPCL) and the government’s commitment to clear previous arrears of subsidy in five equal instalments of ₹1,804 crore.

The power subsidy payable by Punjab Government to power corporation may cross a whopping ₹20,000 crore as per the revised estimates of Punjab State Power Corporation Limited (PSPCL) and the government’s commitment to clear previous arrears of subsidy in five equal instalments of ₹1,804 crore. The PSPCL has submitted its projections to the Punjab Finance Department, which is preparing the budget.

The PSPCL has submitted its projections to the Punjab Finance Department, which is preparing the budget. (HT File Photo)

This calculation is based on the current tariff, and once the tariff increases (likely on March 31, 2023), due to a rise in coal and freight charges, the subsidy amount will certainly cross the ₹20,000 crore.

The power subsidy worked out by PSPCL for the next financial year 2023-24 is ₹18,104 crore without any arrears from previous years. The Punjab government has approved a liquidation plan for arrears of subsidy and as such an instalment of ₹1,804 crore will be paid for five years starting from the current financial year. The second instalment of pending subsidy arrears of ₹1804 crore makes the total subsidy payable will be ₹19,908 crore.

Last year, the Punjab government agreed to pay ₹15,845 crore as a power subsidy for the year 2022-23. Now PSPCL has revised the estimated subsidy to ₹16,515 crores. The difference of ₹670 crore will also be payable in the next financial year.

The revised subsidy amount for the current financial year ( ₹16,515 crore) includes ₹6,071 crore for domestic consumers, ₹2,669 crore for the industry sector, and ₹7,375 crore for agriculture pump sets and a few others.

Punjab started a power subsidy in 1998 for the agriculture sector, and later political freebies included other categories, and latest inclusion after Aam Adami Party (AAP) government came to power in the state is free 300 units monthly to domestic consumers.

As many as 27 states and Union territories out of 36 are providing subsidised electricity to consumers. This comes to around ₹1.32 trillion nationwide in the 2020-21 financial year alone, as per the power ministry data. After Madhya Pradesh, Punjab is the second state where the power subsidy bill has crossed ₹15,000 crore.

“If you see Madhya Pradesh alone, its tariff subsidy amount in 2020-21 was ₹19,595 crore. In 2022-23, with their latest announcements, the state’s budget allocation on electricity subsidy is going to climb over ₹22,800 crore,” a power engineer said.

The subsidy amount of ₹18,104 crore for the next financial year 2023-24 comprises ₹7,310 crore for domestic consumers, ₹3,050 crore for the industry sector, and ₹7,744 crore for agriculture pump sets.

PSPCL website has accordingly revised its existing subsidy amount to ₹20,200 crore and Punjab Government has paid a cash payment of ₹13,971 crore and after adjustment of excise duty and infrastructure development tax, the total amount paid is ₹17,498 crore. The balance payment due in this financial year is ₹2,702 crore.

All India Power Engineers Federation spokesman VK Gupta said that “At the outset, I can say that the AAP government has released the maximum amount to PSPCL in lieu of subsidy, and that is good. However, overall the subsidies, now almost amount to 65% of PSPCL’s total budget. Thus now, PSPCL is fully dependent upon the government, which has defeated its objective to run like a company. Now, PSPCL can’t plan things for the future, as it has less financial freedom as most of the money will come from the government. If we remove cross-subsidies in tariffs, the domestic sector will also take subsidies equal to the agriculture sector. There is a need to rationalize the subsidies, and it will benefit, the state and consumers, as well as PSPCL”, he added.

BOX

PSPCL Projected subsidy for 2023-24 (figures in cr)

300 Units subsidy to all domestic consumers ₹5,883

₹2.5 per unit subsidy to domestic consumers

With a load upto 7.5 KW ₹1,427

Industrial consumer subsidy ₹3,050

Agriculture pump set ₹7,744

Total Subsidy ₹18,104

2nd instalment of pending subsidy arrears ₹1,804.

Total Subsidy ₹19,908 crore

State’s subsidy over the years (Amount in cr)

2012-13 ₹5,784