Free power is the most expensive thing in the world

Last year The Hindu ran on an article series on farmers’ suicides in Andhra Pradesh. Surely after Rajasekar Reddy came to power on ‘free power’ plank, the farmers should’ve heaved a sigh of relief. Or have they?

Consider the classic case of Byra ‘borewell’ reddy, as he is affectionately called in Guntur, impoverished part of AP. He has the distinction of digging, hold your breath, 40 bore wells in his farm with no avail. Why has the water table gone down to alarming levels? Free power, of course. With no metering of water pumps for years, the indiscriminate pumping has turned fertile parts of AP to desert. With no security, banks are reluctant to lend these farmers and as a result, they are turning themselves moneylender vultures putting themselves in a debt trap where only way out is suicide.

Delhi consumers have boycotted their payment of electricity bills citing indiscriminate hike. Regulator DPC has been forced to rollback at the behest of Sonia Gandhi. Why hike? Free power and no metering has led to large power thefts (euphemistically called transmission and Distribution losses) which has put the two private distributers, tata and REL in severe financial stress which they tried to pass on to unsuspecting middle class.

There are countless more reasons why free power is not free. With no incentives, the farmers use the most inefficient pumps that guzzle power. Rich farmers divert the power to their homes. The subsidies put a huge drain on exchequer and translate into high inflation and fiscal deficits which is brunt by the poor which it is supposed to benefit.

So should government abolish free power totally? The intention is good, execution bad. The government could leave the power tariffs to market forces and target the poor by way of say electricity coupons like the rice or wheat coupons given to the BPL families now. A proper census to identify the poor farmers could be best left to Panchayats. The government should ensure that thefts (T&D losses is currently 40% against the world average of 12) are severely dealt with.

Populism is not plain bad. If exercised intelligently.