Behind AAP's free electricity, discounted power schemes lie efforts to plug transmission leaks, ensure better distribution infra

  • It is a no brainer that merely a turnaround in the power sector is not enough for a government to incur a whopping Rs 2, 000 crore as subsidy after spending 35 percent of the yearly budget on education and 25 percent on the health sector.

  • In the last two months, the Delhi government launched two more free power distribution schemes for its residents. The first one for every registered electricity consumer in the capital city and the second for the tenants living in Delhi.

  • A close look at the year-wise budgets of the Delhi government shows that the dispensation has increased its revenues in accordance with its expenditures, by way of widening its tax net over the years.

Even as the price of onions soars up to Rs 60-80 per kilogram across the country, the Delhi government has rolled out a scheme to sell onions at a subsidised rate of Rs 23.90 per kilogram providing the much-sought relief to the consumers.

But subsidy on onions is the last scheme the AAP government would want the electorates in Delhi to take notice of.

In fact, it is the grand subsidy scheme on electricity under which the use of power up to 200 units is made free and 50 percent discount is being granted up to a consumption of 400 units is the programme that the AAP is making its poll plank in the upcoming Assembly election.

 Behind AAPs free electricity, discounted power schemes lie efforts to plug transmission leaks, ensure better distribution infra

File image of Delhi chief minister Arvind Kejriwal. PTI

The Rs 1,700 crore power subsidy scheme was announced with Delhi Chief Minister Arvind Kejriwal himself writing an op-ed in a national daily about it.

The message in the op-ed was clear that the Delhi power scenario has seen a turnaround during the AAP regime and the financial benefits of this improvement has been handed out to the consumer as power subsidy.

But there is much more to the story of the turnaround in the Delhi power sector than what meets the eye. In fact, it is not only the turnaround of the sector what the Delhi power consumers have benefitted from. Rather it is the overall rise in management of resources within the Delhi government which has actually made this scheme a possibility.

Significantly, when Arvind Kejriwal took over as the chief minister of Delhi, he was handed over a grossly in-efficient power system. In his own words, the capital city in the year 2014 alone faced 117 million power cuts.

The crisis in the capital city’s power sector continued as the shortfall in non-solar power supply increased up to 284 million units in the next financial year.

The poor condition of the capital city’s power sector was on account of the high rate of loss in transmission and distribution which was more than 20 percent during the period starting from the year 2007 to 2014. Apart from it, unpaid dues by consumers which were as high as Rs 11, 406 crore also contributed to the gap in the power supply.

Only in 2014-15, the revenue deficit incurred by power distribution companies in Delhi amounted to Rs 3,583 crore.

It was in 2015-16, the power distribution companies managed to earn revenue surplus of Rs 452 crore, despite deficit in power supply.

In that fiscal year, the newly elected AAP government in Delhi allocated an amount of Rs 1,440 crore as subsidy to consumers consuming below 400 units of power a month.

But what actually changed the financial condition of the power distribution companies seeing red has been recorded in a study released by the NITI Aayog.

According to the study, the Delhi government augmented the transmission and distributing system by setting up an adequate number of transformers and by replacing electro-mechanical metres.

Additionally, deals were struck with defaulting customers by granting them a waiver of 25 percent. Poor customers were provided with electricity to decrease loss due to theft of electricity.

On account of this new policy the transmission and distribution losses came down below 15 percent unpaid bills decreased to Rs 8,400 crore and gradually the financial crunch among the power distribution companies eased.

As per data released by the power department, the transmission and distribution losses stand at 13 percent in Delhi today and load shedding at 0.055 percent, which indicates achievement of near 24/7 power supply.

But the turnaround in the power distribution scenario alone is not sufficient to grant free power and subsidy to lakhs of people. The simple reason is along with an increase in earning in power distribution, the expenditure related to power subsidy is also increasing year after year.

If the financial year 2015-16 saw a distribution of Rs 1,440 crore as power subsidy to consumers, the bill grew to Rs 1,578 crore the very next year.

In the last two months, the Delhi government launched two more free power distribution schemes for its residents. The first one for every registered electricity consumer in the capital city and the second for the tenants living in Delhi.

Both these segments of the population would receive free power supply up to 200 units each. Apart from this, the consumers who consume 201 to 400 units would get 50 percent discount on their bills. This makes Delhi one of the states with the cheapest power tariffs.

Accordingly, the subsidy bill on the Delhi government is likely to cross Rs 2, 000 crore mark this year.

It is a no brainer that merely a turnaround in the power sector is not enough for a government to incur a whopping Rs 2, 000 crore as subsidy after spending 35 percent of the yearly budget on education and 25 percent on the health sector. It required an overall rise in financial effectiveness to support such a scheme, given the fact that the Delhi government’s total budgetary expenditure amounts to only Rs 60, 000 crore.

Moreover, it is also to be mentioned that the Delhi government has also been complaining of receiving a meagre amount of Rs 320 crore a year as Central share of taxes, which leaves no option for it other than increasing its own revenue potential.

In fact, the power subsidy scheme not only indicates a turnaround in the power sector but also effective management of available tax and non-tax resources.

A close look at the year-wise budgets of the Delhi government shows that the dispensation has increased its revenues in accordance with its expenditures, by way of widening its tax net over the years.

In the year 2014-15, the Delhi government earned Rs 26, 604 crorea as tax revenue which increased to Rs 30, 225 crore in the next year, Rs 31,140 crore in the year 2016-17 and Rs 38, 400 crore in 2018-19.

Similarly, the total receipt which was Rs 31,577 crore in 2014-15 increased to Rs 51,674 crore in 2018-19 which is roughly a jump of Rs 20,000 crore in a span of five years.

On account of this increase in its earnings, the Delhi government has been registering a surplus in its yearly budgets. The subsidies doled out to the residents of the capital city are nothing but surpluses earned from tax and non-tax sources.

The mega power subsidy scheme launched by the Delhi government which is hailed as a masterstroke before the assembly polls actually hinge on the overall performance of the AAP government -- a fact which makes it an apt poll plank.

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Updated Date: Oct 03, 2019 14:29:26 IST