Excessive farm power subsidies have sent fiscal deficits soaring in most states of India, says a new World Bank study. A glaring example of this largesse leaving states impoverished is Madhya Pradesh (mp).
The state doled out a whopping Rs 3,250 crore as power subsidy in 2000-2001. As against this, the combined expenditure on health, irrigation and rural development schemes was only Rs 2,500 crore. Not surprisingly, power subsidies account for 70 per cent of mp's fiscal deficit.
Giving mp stiff competition are Gujarat and Karnataka, where power subsidies are higher than 65 per cent of their fiscal deficits. In Andhra Pradesh, the amount constitutes around 51 per cent.
The study further reveals that even as electricity tariffs for agriculture cover less than 10 per cent of the supply cost, the total power subsidy bill works out to an estimated Rs 27,000 crore per year. This equals about two and a half times the annual revenue expenditure on canal irrigation, twice the spending on rural development, double the money spent on health and about 25 per cent of India's fiscal deficit.