Delhi Chief Minister Arvind Kejriwal on Thursday announced that people consuming up to 200 units of electricity won't have to pay power bills.
The move comes ahead of the Delhi assembly elections, which are due early next year.
Making the announcement at a press conference, Kejriwal said the Delhi government will give full subsidy to those consuming up to 200 units of electricity and an almost 50 per cent subsidy to people consuming 201 to 400 units.
The decision is effective from Thursday.
"Those consuming up to 200 units of electricity in Delhi will not need to pay their power bills. There will be no electricity charges for them," Kejriwal, who is also the Aam Aadmi Party chief, said.
The government will have to spend Rs 1,800 crore to Rs 2,000 crore on power subsidy annually, according to the chief minister.
"We hope that with this move, there will be huge encouragement for electricity savings in Delhi due to no charges for 200 units of power. The electricity load has been increasing in Delhi.
"Recently, Delhi's peak power load touched 7,400 MW, which was the highest. I feel that electricity load will reduce due to this move," Kejriwal said.
In the summers those using up to 200 units of electricity is 35 per cent of total consumers, while in the winters the number increases to 70 per cent as the power usage is less, according to officials.
Since the AAP came to power in February 2015, the Delhi government has been providing 50 per cent subsidy on power bills.
"The people of Delhi have chosen an honest government. This is the cheapest electricity in the country. In the last four and a half years, the Delhi government has not allowed any hike in power tariff," Kejriwal said.
Defending his government against possible criticism of "freebies" before the assembly polls, he asked why no one was speaking against the "free electricity for our big leaders and officers in country?"
"I just want to give the same benefits to my 'aam aadmi' (the common man) who works for 24 hours," he said.
On Wednesday, the Delhi power regulator announced significant reduction in fixed charges.