Punjab power: What to make of AAPs free electricity scheme

The Aam Admi Party
(AAP), in power in Punjab for just over a month, fulfilled one of its key poll
promises on Saturday when Chief Minister Bhagwant Mann announced 300 units of
free electricity for all from July 1. An expensive political scheme, this was
one of the pledges that was made by AAP chief Arvind Kejriwal on June 29 last
year and is said to have had a significant impact in the agriculture-dependent
state.

Punjab’s free
electricity scheme pledges that the government will give 300 units of
electricity for free to every household. Thus, according to data from Punjab
State Power Corporation Limited (PSPCL), nearly 73.80 lakh households receive
power in the state from this company, the Indian Express reported.

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The billing
patterns are such that 62.25 lakh out of 73.80 lakh households, nearly 84%,
will not have to pay power charges at all, the report said. Moreover, PSPCL
officials said that seasonal variations often lead to increase or decrease in
power consumption.

Power consumption
goes up in summer and goes down in winter. Therefore, electricity consumption
comes down. Average power consumption is calculated on the basis of historical
records. Average consumption was 137 units per month in the category of people
consuming 300 units.

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Right now, prior
to the new scheme kicking in, Punjab spends Rs 3,998 crore per annum on subsidising
power. Of this, Rs 1,657 crore is earmarked for subsidies to Scheduled Caste,
Backward Caste and Below Poverty Line consumers. Another Rs 2,341 crore is
spent on subsiding 64.46 lakh domestic consumers having load up to 7KW.  

If the current
pattern of electricity consumption continues then the Punjab government will
have to shoulder a power subsidy of Rs 5,500 crore. However, speculation is
rife that with power costs cut, average consumption may go up. If all consumers
use 300 units of electricity, the annual subsidy outlay will go up to Rs 11,
452 crore.

On being asked how
the state government plans to pay for it, AAP spokesperson Malwinder Singh Kang
said the government’s income from excise and mining departments is set to
increase in the coming months. He said that with the end of inspector raj, tax
collection is also expected to increase.