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Cultural resistance in sharing power, says economist Tushaar Shah

Even without our water crisis, doubling farmers' income in five years is an unreachable target, says Shah

Shreehari Paliath | IndiaSpend 

Tushaar Shah

India is the world's largest consumer of groundwater. Subsidised electricity for farmers, who use it to pump groundwater, is largely to blame, says Tushaar Shah, economist and public policy specialist. In an interview to Shreehari Paliath, Shah discusses the possibility of increasing farmers' income by using solar power and the need for restricting power subsidies to farmers. Excerpts:

International Water Management Institute's (IWMI) pilot project in Dhundi, Gujarat, led to the setting up of a solar pump irrigators’ cooperative, the first of its kind in the world, which seeks to develop solar power as an additional “remunerative crop”. Tell us about it.

The cooperative was a small experiment designed to draw the attention of the nation to a bigger problem and a much bigger opportunity in solar energy. We found that the primary driver of groundwater crisis is perverse power subsidy. The western corridor of India has the highest concentration of overdeveloped [overused] groundwater blocks. In these parts, over the last three to four decades, farmers have been either getting free or subsidised power. There’s no political will to rationalise these power subsidies. It is possible to provide power subsidies in a manner to ensure that its impact on the aquifer [the underground layer of water-bearing rock] ecosystem is minimised.

When became commercially available, we thought the multiple issues related to the water economy can be resolved if the introduction of is planned well. Although removing subsidy may not be immediately possible, with Dhundi, we thought that farmers can be rewarded for conserving water and energy.

We gave the local farmers solar pumps, connected them to a micro-grid, and then the national grid. The local power company was persuaded to treat the cooperative at par with independent power producers and offer a 25-year power purchase contract to buy surplus energy at the best price possible, which in this case is Rs 4.63 per unit.

With the government planning to incentivise farmers’ transition to through schemes such as Kisan Urja Suraksha evam Utthaan Mahabhiyan (KUSUM), how prepared is the supporting infrastructure including distribution companies, banks (for loans), and farming communities? Is the model ready to be scaled nationwide?

Until now, subsidised power came to farmers with interruptions and mostly at night. With solar power, famers have daytime power. [On days] when they do not need power for irrigation, the surplus power offers a source of additional income. [It also helps] conserve groundwater-the farmers have started investing in pipes to reduce leakages that earthen canals were prone to, and we expect them to use drip irrigation more in cases where it is suitable. In addition to this, it reduces the subsidy burden on distribution companies and reduces the carbon intensity of agriculture.

This is a gain for electricity distribution companies. Financially, distribution companies and state governments have to fork out subsidies of Rs 90,000-95,000 crore annually. Part of it is recovered by charging commercial and industrial customers a high tariff just because the state governments want to provide free or subsidised power to farmers.

An issue, as I see it, is that distribution companies have a cultural problem. They have been in the business of selling power, now they have been asked to buy. So, there is some What we require to scale rapidly is the right kind of incentives. The budget announced the KUSUM scheme, which I think can do the job.

Illustration: Binay Sinha

Illustration: Binay Sinha

The installation of typically requires land and investment. Does encouragement of solar energy in irrigation (and agriculture) particularly favour rich farmers with large land holdings? At an estimated cost of around Rs 1-1.5 lakh for solar pumps post-subsidy, is it feasible, especially as indebted rural households owed, on average in 2013, Rs 1.03 lakh?

All farmers have landholdings of less than one acre. They, of course, were provided capital subsidy from us [IWMI]. But under KUSUM, 30 per cent of the capital subsidy is to be provided by the Ministry of New and Renewable Energy (MNRE), another 30 per cent by the state government, 30 per cent is a priority-sector loan [sectors such as agriculture, housing and renewable energy that banks are mandated to encourage, by the central government and the Reserve Bank of India, with adequate and timely credit].

Farmers are to contribute only 10 per cent. For example, a farmer will have to contribute Rs 25,000-30,000 for a 5-kilowatt pump, which I think is feasible for even small and marginal farmers.

The challenge is that a scheme like KUSUM needs a champion at the highest level, which in my opinion should be the MNRE. It must educate the distribution companies that this can revolutionise the Indian energy economy, especially because the farm sector uses around 23 per cent of the electricity generated but is responsible for nearly 85 per cent of the losses.

Should the ownership pattern be through a collective or is individual ownership as effective?

The ownership of panels and pumps must be individual. The micro-grid will be a collective. But at a feeder level, which is preferred by electricity companies, there is no need for a micro-grid or other infrastructure because the existing connections can be utilised and only a meter needs to be added.

India’s groundwater withdrawal increased 10-fold between 1969 and 2010, according to IWMI. You have advocated for a system of water management that encourages integrated use of rainwater, groundwater and surface water at an individual user-level. What are the hurdles?

We need to create community-level governance organisations and local-level governance mechanisms. Here, too, perverse subsidies are a factor. A state like Punjab, which in the 1960s had 70 per cent-80 per centcanal irrigation, today largely depends on groundwater. A farmer will continue to run a tube-well despite having a canal close to the field due to free power. Tubewell offers convenience and control that canal irrigation may not offer. We need to resolve these incentives that are leading to groundwater depletion as a first step toward such management practices. Additionally, canal management needs to be improved. Many states have not hired irrigation engineers in almost three decades. Resources must be allocated for the management of dams and canals. Large irrigation systems in Punjab and are running without such measures.

The government is keen on doubling farmers’ income by 2022. Given the dire water situation due to high groundwater extraction and climate-related issues such as erratic rainfall and drought, is the target realistic?

Even without our water crisis, doubling farmers’ income in five years is an unreachable target. However, there are things we can do to enhance farmers' income. Ensuring on-farm water control is top on the agenda, but for maximum beneficial income impact, more interventions are needed once water security is established. Examples of villages like Hiwrebazar, Pirewadi, and Ralegan Siddi [all in Maharashtra] show that water security followed by value-addition interventions and market linkages [for farm produce] can rapidly raise farm incomes.

Promoting solar power as a remunerative crop that farmers can grow can also add risk-free income to farmers’ livelihoods. If implemented properly, KUSUM can majorly ramp up farmers’ incomes. Nearly 30 million solar pumps proposed under KUSUM can [produce] up to 240 gigawatt-hours of solar energy to sell to distribution companies every year and can increase a farmer's net income by over Rs 100,000 a year, besides also increasing income through reliable on-farm water control.

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First Published: Sat, May 12 2018. 19:37 IST