In 2004, when the then chief minister of Andhra Pradesh (AP) started a free farm electricity scheme, the total outgo was expected to be Rs 400 crore. Today, over 17.55 lakh farmers avail of the scheme and the subsidy bill on the state has grown over 20 times, to Rs 8,500 crore. Discoms in the state, meanwhile, have been burdened with massive debts.
In FY19, AP discoms reported a loss of Rs 16,736 crore. So, it is not surprising that AP, in FY22, will become the first state to initiate power reforms, moving to a direct benefit transfer system. While the Centre had suggested that states move to the DBT system in its draft electricity Act, to reduce power subsidy outgo, not many states have shown willingness to tread this politically fraught path. However, with AP moving towards DBT for power—the state will start with one district in December this year—others may also take a cue.
