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Want to gift power? First buy it, Centre tells Maharashtra

Union Minister for Power P R Kumaramangalam, while reacting guardedly to Shiv Sena supremo Bal Thackeray's resolve to provide free power to poor farmers in Maharashtra, however, hinted that such a step would be an imprudent one.

''The state governments are empowered to take a policy decision providing free power to any sector,'' he pointed out while addressing a press conference in Pune on Saturday. ''But, if the state governments want to gift power to the farmers, they should themselves buy the gift in the first place before doling it out,'' he stated.

''The Maharashtra State Electricity Board is not in a position to make the gift and if it does start making such gifts, the board will collapse,'' the minister said.

''So, if the Maharashtra government wants to provide free power to the farmers, it should first purchase the power from the MSEB before showering the largesse on the farmers,'' he further said. ''You must buy the gift and not steal it from the MSEB.''

Somebody has to pay for the electricity that is being gifted, he pointed out, adding that the Central Electricity Regulating Act lays down that no subsidy is to be given by state governments unless providing for cash support in the budget.

Kumaramangalam suggested that the alliance partners in Maharashtra should form a coordination committee to sort out differences, if any, on the issue of free power to farmers.

Maharashtra is in a position to generate surplus power within the next three or four years and, if such populist measures are avoided, the state could well become an exporter of power, he said.

He said in the last six months, the consumption of power at the national level has increased by 12.4 per cent while the increase in generation capacity has almost been matched at 11.8 per cent.

As of now, there was an 18 per cent shortage in the peaking power in the country with the consumption increasing at a rate of 14 to 15 per cent every year. At this rate, the country will have to add an additional 120,000 mega-watts of power by the year 2010, he noted.

In a related development, trade bodies and merchants chambers have reacted sharply to the free power decision.

This would give wrong signals to industry and investors. Such short-term populist measures would not only be harmful to the MSEB but to the state's economy, said Anand Mahindra, chairman of the Confederation of Indian Industry (western region).

The recent tariff hike of the MSEB varied from 20 to 63 per cent and this coupled with the increase in the fuel charge has had an adverse impact on the industry in Maharashtra, Mahindra said.

The Indian Merchant Chamber's president Y P Trivedi said that such a move would put more burden on Indian industries which would lose their competitiveness in the international markets. There was no case at all to reduce electricity rates for farmers, he said.

Waiving of electricity bills would not only deepen the losses of the MSEB but would send wrong signals and encourage farmers not to pay their bills in time, Trivedi observed.

UNI