CAG flags Rs 42 crore power subsidy to dormant consumers in Delhi, questions targeting of scheme

The Comptroller and Auditor General (CAG) has flagged multiple irregularities in the Delhi government's power subsidy scheme, including the disbursal of more than Rs 42 crore to dormant electricity connections with no power consumption, while also questioning whether the subsidy reached the intended beneficiaries.

The audit report, tabled by Chief Minister Rekha Gupta in the Delhi Assembly on Friday, reviewed the implementation of the scheme during the four financial years from 2019-20 to 2022-23, when the Aam Aadmi Party (AAP) was in power.

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The report said the subsidy failed to adequately target the "deserving and disadvantaged" sections of society, instead benefiting almost the entire domestic consumer base.

According to the audit, over 30 lakh domestic consumers with monthly electricity consumption of up to 200 units received an average subsidy of around Rs 6,000 per connection annually. In contrast, nearly 16.6 lakh consumers using between 201 and 400 units received an average annual subsidy of more than Rs 10,000 per connection — almost 70% higher than those in the lower consumption bracket.

"As a result, the actual subsidy outgo per consumer was much higher for higher consumption bracket consumers," the report noted.

The CAG also found that subsidy continued to be paid to consumers who had recorded zero electricity consumption over several consecutive billing cycles.

"A total of Rs 42.26 crore was granted as subsidy to such dormant domestic connections during 2019-2023," the report said.

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The audit noted that the Delhi government modified the scheme from October 1, 2022, making it mandatory for consumers to apply for the subsidy following a cabinet decision. However, the change did little to reduce the government's subsidy burden because the number of consumers opting for the scheme exceeded those who ultimately availed of it.

The power subsidy scheme, introduced in August 2019, provides free electricity to households consuming up to 200 units a month, while consumers using between 201 and 400 units receive a 50% subsidy, subject to a maximum of Rs 800 per month.

The report said expenditure on the scheme rose from Rs 2,405.59 crore in 2019-20 to Rs 3,161 crore in 2022-23.

It noted that subsidies under various schemes accounted for nearly 10% of the Delhi government's revenue expenditure during the audit period, with power subsidy alone making up between 66.96% and 70.39% of the state's total subsidy bill.

The CAG further observed that domestic consumers, who accounted for around 84% of Delhi's electricity consumers and consumed roughly 60% of total electricity, received more than 95% of the subsidy disbursed by the government.

The report also questioned the continued routing of subsidies through power distribution companies (discoms) despite repeated recommendations to shift to a Direct Benefit Transfer (DBT) model.

It noted that both NITI Aayog and the Delhi government's finance department had recommended DBT as an alternative mechanism, while the power department itself had acknowledged that such a system could improve transparency and eliminate the need for third-party audits.

Despite these recommendations, the report said, no steps were taken to implement DBT. The power department later told auditors that the mechanism was not feasible in Delhi because of persistent outstanding dues owed by discoms to power generation companies and Delhi Transco Limited.

The CAG recommended an "urgent need" for a transparent and robust mechanism to ensure public funds are used efficiently and reach the intended beneficiaries.

It also advised the power department to regularly analyse consumer data and carry out random field inspections to verify the authenticity of electricity connections and prevent misuse of the subsidy system.