Delhi govt offers power subsidy opt-out amid dwindling liquor revenue

AAP says enough money to pay subsidy, only giving an option to those who don't want it and the move would expose "double talk" of BJP

Delhi is far better financially than most states to continue freebies. Why then has it decided to allow people to opt out of the free electricity subsidy given to those consuming up to 400 units?

Any saving from the Rs 3,250 crore power subsidy that the Delhi government has budgeted for the current financial year will be known after the data on the options exercised by its over 5.8 million electricity consumers is known. The government has projected its revenue surplus at Rs 7,601 crore this financial year, compared to the Rs 3,039 crore deficit it had in the previous year (revised estimates).

However, Delhi has been off the mark in estimating its revenue balance in recent times. It projected a revenue surplus of Rs 7,239 crore for 2020-21 but revised it to Rs 3,770 crore of revenue deficit. Later, it turned out to be Rs 1,450 crore of revenue surplus. Similarly, it estimated a revenue surplus of Rs 1,271 crore for 2021-22 at the time of the Budget presentation but revised it to Rs 3,039 crore of revenue deficit as cited above.

Also, the government's projection of over Rs 7,000 crore of revenue surplus hinges on the Rs 9,454 crore it expected to earn from alcohol this financial year. The amount represented a 57.6 per cent rise from around Rs 6,000 crore it had been earning from alcohol a year in recent times.

The government projected Rs 700 crore from country-made spirits and Rs 8,754 crore from foreign liquor and spirits for 2022-23. This sum is now uncertain after the government last month abandoned its policy on alcohol.

It is still not clear how bad a dent the move to revert to the old liquor policy will have on the government’s finances in eight months of FY23.

Also Read: Should India regulate freebies?
 

According to reports, in the first quarter of 2022-23, Rs 1,594.84 crore was collected from the sale of liquor. Of this, Rs 980 crore is a refundable deposit.

Even if the government in the entire FY23 earns the same amount–around Rs 6,000 crore–it earned from alcohol in recent years, it would still have a gap of around Rs 3,500 crore over the budget estimates under this head. This gap is roughly the same amount that the government expects to incur in power subsidy.

AAP national spokesperson  Saurabh Bharadwaj agreed that the government will get only Rs 6,000 crore revenue from liquor in the current financial year.

However, he did not agree that the option given by the state government to the people to opt out of electricity subsidy has anything to do with revenue loss from scrapping of new excise policy.

“The government has enough money to pay electricity  subsidy to those who want it and we will continue to pay them,” Bharadwaj told Business Standard.

The government wants to give an option to the affluent section who do not want this subsidy, he said reminding that the Modi government also gave the option to the people to give up subsidy.

“But we do not want anyone who wants subsidy to not get it. In fact, we will run door-to-door campaign to urge people to take the subsidy,” he said.

Bharadwaj said the option given by the state government will also expose the “double talk” of BJP which claims that it has 30 per cent support in Delhi.

If those supporting BJP do not want subsidy, they should opt out of it which means that at least 30 per cent people would opt out of the scheme, he said. 

The Delhi government gives 100 per cent power subsidy to those consuming up to 200 units a month and 50 per cent or up to Rs 800 a person using up to 400 units per month.

However, it would be naive to expect that about three million customers who consume 200 units of electricity would opt out of the scheme. Some of 1.7 million customers who use up to 400 units may opt out of the scheme..

Chief Minister Arvind Kejriwal said on Wednesday many people had questioned his government's subsidy scheme to even those who can pay the bills. "They said they should be given an option to give up the subsidy. I completely agree with them and the subsidy should only be offered to the needy or someone who opts for it," he said.

This raises the question of whether the AAP government in Punjab will follow suit and whether the party dilutes its election promise to people in Gujarat and Himachal Pradesh with this option.