Power Subsidies : A Reality Check on Subsidizing Power for Irrigation in India

Abstract

After almost a decade of high-level
\n efforts to bring electricity tariffs closer to the cost of
\n supply, India has barely made a dent in the long-standing
\n and increasingly uneconomical practice of subsidizing power
\n for irrigation. Progress has been slowed by concern that
\n higher tariffs would harm farmers and thus undermine the
\n achievements of the green revolution package-cheap power and
\n water, new seeds and fertilizer-aimed at enabling the
\n country to feed itself. But a new study shows that a package
\n of rapid electricity sector reforms, including a move toward
\n cost-covering tariffs and investments to improve the quality
\n of power supply, would increase farmers' incomes by
\n 40-100 percent over a six-year period.