After a dual pricing mechanism for kerosene, the Planning Commission has floated the idea of supplying subsidised power to below poverty line population.
A Planning Commission official said according to a proposal being formulated, those below the poverty line would be exempted from paying for the first few hundred units of power they consume. Subsequently, they would be charged a marginal rate for the electricity consumed.
But the move required 100 per cent metering and the Planning Commission was pushing for that, officials added. The issue of metering had to be addressed by the power distribution companies and the state electricity regulatory commissions, they said.
The government had earlier proposed to eliminate cross-subsidies but has decided to water down the legal provision in this regard. Last week, the Cabinet approved a Bill to amend the Electricity Act, 2003 to permit gradual reduction in cross-subsidies.
Planning Commission Deputy Chairman Montek Singh Ahluwalia recently expressed his displeasure at the Rs 28,000-crore (Rs 280 billion) losses of the state electricity boards. He had aired concern about the state governments giving subsidies despite not being able to afford them.
The government is of the opinion that it is not politically feasible to adopt a purely economic model for energy pricing. However, officials said subsidies have been offered without a proper analysis of their economic and social rationale.
The Planning Commission is aiming to reduce the number of people below the poverty line to bring it down to 7-8 per cent during the 11th Plan period (2007-2012).
According to official estimates, 26 per cent of the population lived below poverty line in 2001. It was expected to come down to 21 per cent by the end of the 10th Plan in 2007.
Power factor
- The move requires 100 % metering, and the Planning Commission is pushing for it
- Last week, the Cabinet had approved a Bill to amend the Electricity Act, 2003, to permit gradual reduction in cross-subsidies
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