Earlier this year, the Cabinet approved the Kisan Urja Suraksha evam Utthaan Mahabhiyan (KUSUM). With a Budget allocation of Rs. 34,000 crore, and a similar contribution expected from the States, KUSUM aims to provide energy sufficiency and sustainable irrigation access to farmers. At present, despite burgeoning farm power subsidies, nearly 30 million farmers, especially marginal landholders, use expensive diesel for their irrigation needs as they have no access to electricity. More than half of India’s net sown-area remains unirrigated. KUSUM could radically transform the irrigation economy if the government chooses an approach of equity by design and prudence over populism.
Equity by design
First, KUSUM should aim to reduce the existing disparity among States with regard to solar pumps deployment and irrigation access. Chhattisgarh and Rajasthan together account for about half of the two lakh solar pumps currently deployed in the country. This is surprising given the low irrigation demand in the former and poor groundwater situation in the latter. On the other hand, States such as Bihar, Uttar Pradesh and West Bengal, where penetration of diesel pumps is among the highest, have not managed to deploy any significant number of solar pumps. This disparity highlights poor State budget allocation towards solar pumps and the lack of initiative by State nodal agencies. To encourage more equitable deployment of 17.5 lakh off-grid pumps by 2022, the Centre should incentivise States through target-linked financial assistance, and create avenues for peer learning.
Second, KUSUM must also address inequity within a State. For instance, 90% of Bihar’s farmers are small and marginal. Yet, they have received only 50% of government subsidies on solar pumps. On the other hand, in Chhattisgarh, about 95% of beneficiaries are from socially disadvantaged groups due to the mandate of the State. Learning from these contrasting examples, a share of central financial assistance under KUSUM should be appropriated for farmers with small landholdings and belonging to socially disadvantaged groups.
Third, instead of a one-size-fits-all approach, KUSUM should provide greater financial assistance to smaller farmers. KUSUM proposes a 60% subsidy for the pumps, borne equally by the Centre and the States, and the remaining 40% will be the farmer’s contribution — 10% as down payment and 30% through loans. This unilateral financing approach will exacerbate the inter-farmer disparity given the inequity in access to credit and repayment capacity between small and large farmers. A higher capital subsidy support to small and marginal farmers and long-term loans with interest subsidies for large and medium farmers would be a more economical and equitable alternative.
Prudence over populism
Fourth, solarising existing grid-connected pumps, as proposed under the scheme, needs a complete rethink. Existing grid-connected farmers, who have enjoyed power subsidies for decades, would receive the same financial support as that received by an off-grid farmer. In addition, they would earn regular income from the DISCOM on feeding surplus electricity, furthering the inequitable distribution of taxpayers’ resources. Instead, the scheme should only provide Central government subsidy of up to 30% for solarisation, and use the proposed State support to incentivise DISCOMs to procure energy from the farmers.
Also, solarising grid-connected pumps must include replacement of the pump. Poor efficiency levels of the existing pumps would mean unnecessary oversizing of the solar panels and lesser available energy to feed into the grid. Moreover, instead of feeding surplus energy to the grid, solar pump capacity could be used to power post-harvesting processes, which complement the seasonal irrigation load and can enhance farm incomes through local value addition. Further, the injection of solar power by farmers would require the entire agriculture electricity line (feeder) to be energised throughout the daytime, including for those not having solarised pumps. This would aggravate DISCOMs’ losses on such feeders. Instead, an effective alternative is to solarise the entire feeder through a reverse-bidding approach, and provide water-conservation-linked incentives to farmers as direct benefit transfer.
KUSUM should not woo a certain section of farmers with short-sighted objectives. If designed better and implemented effectively, it holds the potential to catapult the Indian irrigation economy from an era mired in perpetual subsidy, unreliable supply, and inequitable distribution of resources to a regime of affordable, reliable, and equitable access to energy and water.
Tauseef Shahidi was a Research Analyst and Abhishek Jain is a Senior Programme Lead at the Council on Energy, Environment and Water