New Delhi: The benevolent attitude of the state governments towards the farmers while distributing electricity has not only created an acute power crisis but also put a heavy debt on the state. As a result, several states fail to set up new power plants and are compelled to short-term purchase of electricity.

Decipher this: Punjab and Tamil Nadu are providing free electricity to farmers, whereas remaining states are charging only half of the total revenue from the rural belts. Therefore, states like Uttar Pradesh, Tamil Nadu and Rajasthan have been forced for short-term electricity purchase.

As per the data released by rating agency Fitch on the prevailing condition of the electricity sector in the country, the agriculture sector of the country consumes at least one fourth of the total power consumption. But the revenue collected from the sector is a mere 15 percent as compared to the industrial sector.
The outcome being that the industrial sector has to suffer and Indian industries lag far behind in the global competition.

The total power utilised by the agriculture and domestic sector amounts to nearly half of the total electricity consumption.   

The companies supplying power to both these sectors have no other option than to face heavy financial deficits. Making the situation even worse, the state governments do not provide them the sufficient subsidy and the payments in this regard are not made on time.

Last fiscal, against the subsidy demand of Rs 350 billion, only half of the payment was made to the power supply companies.

According to Fitch, under the political influence the power regulator is unable to conduct a proper revision of tariffs. The power tariff is extremely low and even the states which are in a financially sound position will have to increase the rates by 7 percent each year if they want to meet the deficits. The states, which do not have a strong economic base, will have to increase the tariff by 19 percent per annum.

Five major states including Rajasthan, Tamil Nadu, Uttar Pradesh, Andhra Pradesh and Madhya Pradesh have not hiked the power tariff in last five years. Therefore, the power companies are unable to meet the electricity demand.

In wake of the lack of funds, setting up a new power plant has become a herculean task. During the past three years, the total amount of short term power purchase has gone up manifold.