Union Budget 2020-21: Will proposals on discom reform, PM-Kusum work?

Previous attempts at discom reform did not yield results while standalone solar pumps do not incentivise farmers

By Pratha Jhawar
Published: Saturday 01 February 2020
A solar pump. Photo: Wikimedia Commons

Union Minister for Finance Nirmala Sitharaman’s proposals to reform power distribution companies (discoms) and increase the number of standalone solar pumps, as announced in her budget speech on February 1, 2020, will hardly have any impact on the energy sector.

The Narendra Modi government provided power supply to some 2.62 crore households since October 2017 under the Pradhan Mantri Sahaj Bijli Har Ghar Yojana  (Saubhagya) scheme, Sitharaman said. Less than 20,000 households are currently un-electrified in India, she claimed.

But, she acknowledged the troubled situation of India’s power distribution sector. “The distribution sector, particularly the discoms, are under financial stress,” Sitharaman said. She promised measures to reform discoms.

However, previous efforts to improve the financial health of discoms under Uday (Ujjawal Discom Assurance Yojana) have not yielded much and they continue to be the bottleneck in the power supply chain.

Sitharaman also said that through PM-Kusum (Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyaan), the government intended to reduce farmers’ dependence on diesel and kerosene and link their pump-sets to solar energy.

The scheme that was announced last year, had a provision for 17.5 lakh standalone and 10 lakh grid-connected pumps. In her budget speech, Sitharaman proposed to expand the scheme to provide 20 lakh farmers for setting up standalone solar pumps and 15 lakh farmers to solarise their grid-connected pump-sets.

The Centre for Science and Environment (CSE) in its report Silver Bullet: Redesigning Solar Pump Progamme for Water and Energy Security, had cautioned that standalone pumps do not incentivise farmers enough to optimise their use of energy and extraction of groundwater. Yet, they are the biggest component of the scheme.  

Besides these proposals, Sitharaman also pointed at the Union Ministry of Power’s intention to promote smart metering. For this, she urged all the states and Union Territories to replace conventional energy meters with pre-paid smart meters in the next three years.

“This will give consumers the freedom to choose the supplier and the rates as per their requirements,” she said. Sitharaman proposed to provide Rs 22,000 crore to the power and renewable energy sector for the year 2020-21 under the budget.

A proposal to set up large solar-powered capacity alongside rail tracks on the land owned by the railways was also under consideration, Sitharaman said.

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