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MSEB against free power

Aditi Phadnis  |  New Delhi 

The Maharashtra State Electricity Board (MSEB) has strongly opposed the Maharashtra government's proposal to provide free power to farmers and has warned the state government that it would have to pay Rs 2,798 crore this year to subsidise power and write off arrears. Worse still, it should get ready to pay an annual subsidy bill of Rs 3,000 crore within the next five years.
The MSEB is the latest to oppose the provision of free power to farmers. The move was announced last month and was opposed by influential political leaders like Sharad Pawar and Prithviraj Chavan. The MSEB passed a resolution on the issue some weeks ago. This has been conveyed to the government.
The MSEB has other gloomy predictions. It says that the Union power ministry has assessed that Maharashtra needs to add 1,000 MW every year to its generating capacity till the year 2011-12.
This means an investment of Rs 4,000 crore in generation every year and an equal amount in transmission and distribution. Even with a loan of 90 per cent, the state government has to invest Rs 800 crore every year, given the MSEB's inability to generate resources internally.
Instead of bringing down subsidies and using the money to augment generating capacity and strengthen the transmission and distribution infrastructure, the government's investments are going to dwindle to nothing because of the additional burden of subsidy.
What is more this will endanger the medium-term fiscal reform plan agreed between the government of Maharashtra and the World Bank and create widespread anarchy and hardship because low investments will lead to poor quality of power, causing farmers to take the law into their own hands, the resolution says.
"The proposal of giving free power to farmers will reverse all the reform initiatives that have been taken in the last five years," the resolution states. It says that provision of free power will increase the tendency to reach the rapidly falling water table.

First Published: Thu, August 19 2004. 00:00 IST
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