Populist Stance May Spell Disaster In Punjab
The Punjab governments decision to provide free electricity for operating tube-wells to farmers, irrespective of the size of their landholdings, is bound to adversely affect the already poor financial health of the border state, feel several experts. The state owes almost Rs 7,000 crore to the Centre, which it had borrowed over the course of a decade to fight terrorism.
Punjab has to pay an annual average instalment of Rs 600 crore to the Centre towards repayment of the loan. Last year, the then Prime Minister P V Narasimha Rao had agreed to waive the instalment.
But the present Prime Minister, H D Deve Gowda, may not oblige Punjab Chief Minister Prakash Singh Badal by waiving another instalment. Significantly, a request by former Chief Minister Rajinder Kaur Bhattal for another waiver this year had received a non-committal response from Gowda.
The decision to provide free electricity for operating tube-wells to farmers will cost Rs 350 crore to the state exchequer. Asked where the money would come from, Badal replied with a smile: Please dont ask us how will we arrange the money. We have a jaddu ki chari (magic wand)....
Political economists feel that the decision could create resentment among a large number of farmers who have not been provided power connections to operate their tube-wells.
According to state officials, there are 8.6 lakh tube-wells in Punjab, of which 6.84 lakh run on electricity while 1.76 lakh operate on diesel.
The farmers who do not have power connections are bound to be unhappy with Badals decision. Incidentally, the operational cost of a diesel-operated tube-well is six times higher than an electric tube-well.
The decision has also demoralised the Punjab State Electricity Board (PSEB), which is already suffering financially due to huge transmission and distribution losses. With the farm sector in Punjab consuming nearly 40 per cent of total electricity in the state, the board has lost potential revenue of nearly Rs 1,000 crore per annum.
Experts also warned that populist moves would only discourage private investment in the state, apart from depriving Punjab of World Bank assistance.
They pointed out that the World Bank, which is insisting on abolition of all kinds of subsidies, will not be forthcoming in providing financial assistance to Punjab if the Badal government continues with its populist measures.