Earlier this month, the Andhra Pradesh government issued orders announcing a major change in the free power supply scheme for farmers in the state. Instead of the subsidies borne by the state government being directly transferred to the power distribution companies, the government has announced that it will now switch to a direct cash transfer system. According to a government order (GO) issued in this regard on September 1, individual meters will be installed for agricultural power connections. Based on these readings, the government will transfer the bill amount to the farmers’ accounts, who will then have to pay the power distribution companies, or DISCOMs.
The move has seen severe opposition from opposition parties, as well as farmers’ groups. The Andhra Pradesh Rythu Sangham has called for protests at several electrical substations in the state on Monday. Over the past two weeks, different groups in the state, including the Rythu Swarajya Vedika and the Tenant Farmers’ Association, have also staged agitations against the direct benefit transfer (DBT) system, demanding that the government revoke the order (GO MS 22).
This resistance was foreseen by the state government. Earlier in June, in a letter to the Centre expressing opposition to the proposed Electricity Amendment Act, state Energy Secretary Nagulapalli Srikant had also referred to the DBT of power subsidy, warning that it had the potential to "create social unrest."
Since the official announcement was made earlier this month, even though the government has made attempts to allay farmers’ apprehensions — trying to persuade them of purported advantages of the scheme — farmers have not been convinced.
The scheme is being implemented on a pilot basis in Srikakulam district, starting from September. In the government order, Nagulapalli Srikant said that the Central government, in order to grant additional funds to the state, has made it mandatory for states to carry out reforms in four sectors.
“One of the main reforms is the Direct Benefit Transfer scheme in providing electricity to farmers. There are two major directions from the Centre in this regard. Starting from the financial year 2021-22, direct cash transfer must be done to farmers, who will then pay the bills to power companies. And this must be implemented in at least one district before December 31, 2020,” the order said.
The switch to DBT was done in order to meet the Centre’s conditions for increasing borrowing limits under the Fiscal Responsibility and Budget Management (FRBM) Act. These conditions imposed by the Centre have seen criticism from various quarters, including Telangana Chief Minister K Chandrasekhar Rao, who had accused the Central government of treating states like 'beggars'. KCR accused the Centre of trying to dominate the states, by insisting on states implementing the reforms in four sectors to qualify for increased borrowing.
Earlier in June, Nagulapalli Srikant in his letter to the Centre on the Electricity Amendment Act, had written on behalf of the state government that the amendments seemed to be aimed at usurping the powers of the states. The letter said that the proposed amendments appeared to be “leaning towards centralising the electricity subject which is under the concurrent list.”
“It appears to offer more protection to generators than required, and is likely to increase power purchase costs which constitute 75% of power sector cost and thereby cost of service. This is likely to undermine consumer interest and affect industrial growth," the letter had noted.
Rythu Swarajya Vedika leader in Anakapalle, Balu, said that the impact of giving in to the Centre’s coercion may not be immediately visible. “Farmers fear that tomorrow if electricity becomes a subject of the Central government, their voices will not reach Delhi. Right now, it looks like the state government is giving in to pressure from the Centre,” he said.
Leaders of farmer groups also fear that ceding control to the Central government could pave the path for eventual privatisation of the power sector, further affecting farmers adversely.
Andhra Pradesh Rythu Sangham Krishna District President Kesava Rao also expressed the same concern. “Once distribution companies and generators are privatised, only the transmission company will remain under the government. All the major expenses of laying transmission lines etc. will be incurred by the government, while private corporations will become the major generators,” he said.
While opposition parties have claimed that installing meters will eventually lead to dilution of the free power scheme for farmers, the YSRCP government has insisted that the scheme is a key component of its welfare scheme agenda and an extension of the legacy of former Chief Minister and CM Jagan’s father YS Rajasekhara Reddy.
According to Nagulapalli Srikant, every year, subsidies amounting to Rs 8,353.6 crore are borne by the government for 17.55 lakh agricultural connections, for the use of more than 12,000 million units of power.
The government order announcing the switch to DBT states that no burden will be laid on farmers and that the monthly bill amount will be transferred to their accounts by the government at the beginning of each month. In the event of any lapse on the government’s behalf, the order assures that the DISCOMs will not stop power supply.
The state government has claimed that farmers will benefit from knowing how much subsidy they’re receiving from the government. By paying the DISCOMs directly, farmers will have the authority to demand better services and hold the power companies accountable, the state government said in its order.
While the installation of meters for agricultural power connections is bound to be an expensive exercise, this will be taken up by the DISCOMs, with the government bearing the expense. Ajeya Kallam, Principal Advisor to the Chief Minister, has said that the smart meters which will be installed will have many advantages. He said that any problems in electricity supply can be tracked and rectified, and that short circuits and damages in transformers can be prevented through the use of smart meters.
Kesava Rao, however, called the meters a ‘noose’ for farmers. Calling the switch to DBT a betrayal by the state government, he raised concerns over the implementation of the scheme, noting that subsidies transferred in the case of other DBT schemes often tend to be much lower than the expense incurred by the beneficiary.
The government plans to set up committees at the village, mandal and district levels to implement the scheme. The village committees will be tasked with identifying beneficiaries. Connections in the name of former landowners will be changed to the name of present owners. An Assistant Engineer from the DISCOM, and a Deputy Task Engineer will verify the connections. Separate bank accounts will be created for the scheme so that banks do not divert the DBT amount towards the farmer’s loan repayments or other such purposes. The creation of these separate accounts, and the verification of power connections, will be done based on the farmers’ Aadhaar numbers.
Ajeya Kallam has also said that tenant farmers in the state will not face any problems with the scheme. Balu, however, claims that the government is yet to identify lakhs of tenant farmers in order to issue the Crop Cultivator Rights Card (CCRC) to avail benefits under the Andhra Pradesh Crop Cultivator Rights Act passed last year. “Less than 3 lakh farmers have received the CCRC cards so far, whereas there are at least 15 lakh tenant farmers in the state. When they are unable to even identify all of them in the first place, how can they guarantee that they will create accounts for all of them,” he questioned.