The bottom line on free electricity

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The bottom line on free electricity

Tuesday, 23 April 2019 | Jin Kathrine Fosli/ A Amarender Reddy

For a State where agriculture is largely based on ground water, provision for round-the-clock power supply may not be the best policy. Instead, the Telangana Government’s scheme has led to increasing farm distress. Alternatives such as recharging wells, water harvesting and conservation must be explored

Sattaiah, a farmer in Shivampet village of Medak district in Andhra Pradesh, dug another borewell to save his standing crop from drought as his existing borewell had dried up in January. Like his previous one, the new alternative, too, failed and he incurred huge losses. Studies conducted by the Indian Council of Agricultural Research and the World Bank prove that groundwater-irrigated farms have twice the crop productivity as compared to rain-fed farms. However, groundwater must not be over-exploited as it is a natural resource with limited availability.

In this context, is the Telangana Government’s scheme to provide round-the-clock power supply to 2.3 million farmers for free just another populist policy? Or is it a predominantly agricultural State’s desperate response to climate change? Or will it really help the farmers in the long run? Similar policies have been launched in many other States, including Andhra Pradesh, Punjab and Maharashtra since the late 1970s.

Never mind the answer, more power does not equal more water in the long run. Water being a limited resource, free electricity for agriculture can lead to over-extraction, failed investments and worse still, borewell failures rather than making this scarce resource cheaper. Depletion of groundwater levels to 1,000 feet and more has been reported in some drought-prone areas due to excessive digging of borewells. The Telangana Government’s move to provide 24x7 free electricity to farmers is lopsided and neglects other water sources such as farm ponds and village tanks. Complementary water sources and recharging systems are left to dry up, rather than being maintained. In the current situation,  every farmer must fend for himself, in contrast to the traditional systems which usually required cooperation, whether voluntary or forced through regulation.

Due to the geology of our States such as Telangana, which have underlying hard rock formations, farmers are competing in a game they cannot win. According to figures from the Central Ground Water Board, farmers are not likely to hit major water-bearing fractures below 100-110 feet. Groundwater levels had already sunk beyond that level in many places due to extensive well drillings when the 24x7 free electricity policy was implemented.

Besides poor and erratic rains, over-exploitation of water without sustainable recharge options has led to a decline in groundwater levels in villages. The unfortunate outcome is the diminishing of the common resource base, losses on investments, crop failures and possibly, drinking water shortage. As of today, about 31 per cent of blocks in India are at a semi-critical, critical or over-exploited stage in terms of groundwater exploitation.

Fiscal costs to the Government: The central electricity authority, which announced the details of the progress of various States in the power sector for the year 2017-18, observed that Telangana secured the first place in the country in power consumption and per capita power consumption. The free electricity scheme was introduced with an aim to reduce farm distress but has in turn financially distressed the discoms. Distribution companies were already heavily in debt when the 24-hour free electricity scheme was introduced from December 31, 2017. With groundwater table declining, electricity use is bound to increase because of the extra power needed to pump water from deeper levels.

Discoms all around the country are adversely affected by subsidies such as free electricity. This is one of the factors that contributes to the widening gap between income and cost of supply, according to the Central Electricity Authority. One can even say that falling groundwater levels lead to higher levels of debt for electricity companies or levels of expenditure that are hard to recover.

Electricity consumption for agriculture in Telangana amounted to 29 per cent of the total consumption in 2016. The same sector contributed only three per cent to revenues for the electricity board. Still, there has been no policy shift to bridge the gap between electricity consumption and revenue generation. There are many other options that are more viable, environmentally and economically, such as construction of farm ponds, reviving village tanks and promoting micro-irrigation systems.

Look for alternatives: While the policy has been around too short to draw any definite conclusions, on their own account,  farmers must shift their cropping patterns to sowing water-intensive crops such as paddy. This is not to say that it is a sustainable policy or that the farmers’ response is viable. High informal debts due to investments in digging borewells was one of the causes for farm distress. Although free electricity contributes to reduced input costs, it does little to address the risks and losses faced by farmers. There is a need to strengthen institutions where farmers can acquire low-risk formal loans and facilitate viable payment conditions.

Farmers need information and education on which crops they should opt for in water-scarce conditions. They should be given incentives to grow suitable variants. Instead of blindly digging borewells on farmers’ fields, they must be given assistance by hydrologists or technical experts. Many farmers also hold the opinion that instead of a 24-hour electricity, about five hours of uninterrupted electricity are enough to pump water for crops. Promoting groundwater recharging structures like farm ponds and village tanks, which reduces risk of borewell failures, is another alternative that can be explored.

In an attempt to discourage over-exploitation of groundwater and ensure a more robust regulatory mechanism in the country, the Government has proposed to slap for the first time a Water Conservation Fee (WCF) on extraction by all users of groundwater in the country, barring the armed forces, farmers and individual households.

There are questions that are hard to address for State politicians but should be addressed at the national level. Faced with the consequences of climate change and disintegration of the rural resource base, how can farmers and the landless rural population make a living in a sector dependent on monsoon rains, frequent failures of rains, prolonged dry spells, lack of water and decreasing hopes of livelihood?  Should these forces be left to live their own lives? Without any concerted effort, the common rural inhabitant will drift like a splint in the open seas tossed by the forces of climate change, market fluctuations and shifting policy regimes.

(A Amarender Reddy is Principal Scientist, Agricultural Economics, ICAR and Jin Kathrine Fosli is with the University of Oslo)

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