Date:15/03/2005 URL: http://www.thehindubusinessline.com/2005/03/15/stories/2005031503001700.htm

Back AP CM defends modified free power scheme

Our Bureau

Hyderabad , March 14

THE Chief Minister, Dr Y.S. Rajasekhara Reddy, has strongly defended the modifications to the State Government's policy of free power supply to the farm sector that excluded from the scheme big farmers and agriculturists who have other sources of income and were paying income tax.

The Chief Minister told the Legislative Assembly on Monday that the modifications were needed to sustain the power distribution system while ensuring that the benefits under the scheme would continue to reach the needy farmers.

Stating that only around 1.5 lakh agricultural connections out of a total over 21.75- lakh connections in the State would be charged under the modified policy, Dr Reddy said that the revenue to be realised on account of revised scheme was estimated to be just around Rs 35 crore per annum, much less than the huge subsidy amount being footed by the Government.

He said that the policy was modified not with a view to reducing any financial burden on the State exchequer but to check wastage of power. The revised policy would be effective from the next fiscal.

Earlier, disclosing the details of the modified policy in the House in response to a three-hour discussion under Rule 304, the Finance Minister, Mr K. Rosaiah, said that only 6.9 per cent of the farmers would not be ineligible for free power supply under revised policy.

The Government would continue to provide power free of cost to the remaining 93 per cent of the farmers in the State, Mr Rosaiah said.

The Opposition Telugu Desam Party, however, staged a walkout from the House in protest accusing the ruling Congress Party of going back on its electoral promise and "deceiving people".

The Leader of the Opposition, Mr N. Chandrababu Naidu, said that the total investment needed by the farmers to fulfil the conditions imposed would be of the order of Rs 7,000 crore.

The interest on such a huge investment would be Rs 900 crore while the Government's expenditure on providing free power accounted for less than Rs 350 crore per annum.

The modified policy imposes certain conditions, described by the Government as demand side management (DSM) measures, on the farmers to be eligible for enjoying free power in future. These conditions include installation of capacitors and friction less foot valves for their pump sets by 2006 and going in for HDPE or RPVC piping and ISI marked pump sets by March 2008.

The salient features are:

Farmers in dry land areas having up to three agricultural connections in the name of their family will continue to get free power.

Farmers in dry land areas having more than three connections will be charged a tariff of Re 0.50 per unit and Rs 0.20 per unit if they adopt DSM measures.

Farmers in dry land areas who are eligible for free power supply shall not grow paddy in second crop. If they do so, they will be charged a tariff of Re 0.20 per unit.

Small and marginal farmers having a landholding of wetland up to 2.5 acres under major and medium irrigation projects will continue get free power provided they undertake DSM measures during the stipulated period.

Farmers owning more than 2.5 acres in wetland areas will be charged a tariff of Re 0.50 per unit.

Corporate farmers, partnership firms, societies and income tax assessees owning agricultural land will be charged a tariff of Rs 2 per unit. A 50 per cent incentive shall be permitted if these farmers adopt DSM measures.

Up to 50,000 new agricultural connections will be released annually under free power category in dry land areas. Additional connections would also be released under Tatkal (out of turn) scheme at a tariff of Re 0.20 per unit.

The utilities will continue to collect customer charges from the agricultural consumers at a rate of Rs 20 per connection every month.