Not just farm loans, CM Kumaraswamy staring at bulging power subsidies too

The government provides free power to irrigation pump sets of up to 10 HP capacity, and to consumers from low-income households (called Bhagya Jyothi/Kutira Jyothi consumers). There are about 27 lakh irrigation pumpsets and 28 lakh low-income households that get free supply of electricity.

The rising power subsidies will only further add to the CM’s woes, who also holds the finance portfolio. The state’s finances are already in a shambles because of the JD(S)-Congress regime’s promise to write off farm sector loans. How much and what kind of loans etc., are details the CM will announce in his Budget on Thursday.

According to reports, the chief minister is planning to waive crop loans. That itself makes up about Rs 33,000 crore. The government is expected to announce a big relief to the farm sector in deference to a commitment the JD(S) made to farmers ahead of the May 12 Assembly polls.


In its May 14 tariff order, the Karnataka Electricity Regulatory Commission (KERC) estimated the subsidy that the government has to provide electricity supply companies (Escoms) at Rs 11,048 crore for 2018-19. Between last year and this year, the subsidy has gone up by Rs 1,000 crore. In his Budget presented before the elections, then chief minister Siddaramaiah earmarked Rs 9,250 crore towards power sector subsidy, an allocation that is below last year’s actuals. Kumaraswamy will need to mobilise about Rs 2,000 crore to bridge the gap which has only been widening each passing year.

The regulator, in its tariff order, has clearly stated that if the government fails to pay for pump sets and for lighting at low-income households, then the utilities must recover the bill from farmers and low-income families. The other option, the regulator said, is to supply electricity to these consumers only to the extent of the subsidy provided.

Power sector sources say rising subsidies reflect increasing power purchase costs as well as the inability of utilities to rein in thefts. The utilities tend to pass off part of electricity stolen as electricity consumed by irrigation pump sets.

A KPTCL official, when contacted, said the utilities have never exercised the option of billing farmers in the event of a delay in receiving subsidies. Instead, they show it as receivables in their accounts. The government, at the end of the year, usually adjust bulk of it against the power purchase dues the utilities owe to the Karnataka Power Corporation (KPCL), a state-owned generator.