Content area
Full Text
I
INTRODUCTION
The electricity subsidy for the Punjab farmers, particularly since 1997-98 when it was extended as totally free, continues to be a debatable issue. A part of the electricity cost was recovered from the farmers on the per unit basis of consumption upto late 1970s. It was changed to horsepower of the motor irrespective of the consumption for the convenience (economy) in collection of the amount, upto 199697. There was also an occasional recovery in small amounts during 2002-2005 and 2010-11. Thus the electricity subsidy for agriculture was a small amount to begin with but assumed gigantic proportion over time as its consumption increased. The number of electric tubewells has increased, the area under rice, which means that major irrigation requirement has increased, while the water table has gone down, which means more power is needed to draw out the same quantity of water and the cost of electricity supply has also increased. All these issues are inter-related; and, the free electricity to the farm sector is often quoted as the main precursor to the increase in the rice area, over-exploitation of groundwater and as an obstacle to diversification. The main theme of the paper is to analyse comprehensively the extent and impact of electricity subsidy on the farm economy and the possibilities of restructuring the incentives to contain the electricity subsidy for moving towards achieving the long term goals of efficiency and resource conservation.
II
OBJECTIVES AND METHODOLOGY
The objectives of the paper are (i) to study the trends in the consumption of electricity, the cost recovery and the subsidy in Punjab agriculture, (ii) to estimate the average cost per tubewell irrigation, the electricity consumption per irrigation over time and contrast it with the fall in water table in Punjab, (iii) to examine the impact of electricity subsidy on the profitability of rice and wheat over time and their relative profitability as compared with other competing crops, (iv) to examine the equity issues of the electricity subsidy distribution vis-s-vis the farm size distribution of operational holdings, and (v) to examine the impact of crop substitution of high water-cum-electricity using rice crop by the low water-cum-electricity using cotton crop, which also marks important agro-ecological regional characteristics of the state1, and other policy related issues.