Direct credit of Electricity Subsidy to consumers in Tamil Nadu, India.

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TANGEDCO (Tamil Nadu Generation and Distribution Company Ltd.,) continues to make losses because of subsidy, says Power Ministry.

I am writing a little late on this news item that appeared in the Hindu on 7 July 2018.

The statement is certainly true! But what is the remedial action planned or executed?

I have raised this issue through our tax payer associations and many other forums at least every month if not every week. The Associations have also sent petition after petition to the Chief Minister, Power Minister and others to set right this anomaly in administration.

What is to be done is simple and straight. Subsidy is something that is given by the government to people who are suffering. Gas Subsidy, Food subsidy, Electricity subsidy and many others exist. Now the government is rationalising this by giving direct credit of subsidies. Gas subsidy was the first that went the direct credit way. Fertiliser is almost done. Food subsidy has made a beginning and is on the way towards implementation.

But electricity subsidy?

People do not even want to talk of direct credit of electricity subsidy to the common man. It is only sane that the subsidy is directly credited to the consumer, be it a farmer or a household or a specific industry.

Why is this important?

If subsidy is removed, all the power prices will be uniform and market decided. This will remove thieving of power. Whether someone consumes it for house or for industry or for office, if he is going to pay the same charges, where is the need to thieve? Electricity theft would reduce by at least 70%. Direct theft of power from the power lines would need other stringent action, of course.

Second, with subsidy out of the way, TANGEDCO would be able to record proper sale and therefore, a good profit. Why is the government standing in the way of TANGEDCO making profits?

Third, the subsidy will reach the right person with no intermediate beneficiary to the money being passed on to the consumer. Any intermediary will have at least their cost apportioned into its working. Reduction of power theft will also save subsidy. All this could be as high as 20 to 30% of the subsidy amount and to that extent it is a loss to the government and the people. Direct credit will immediately save at least 20 to 30% of the subsidy given to TANGEDCO.

Four, once subsidy is removed, there is no legitimacy in charging a cross subsidy on the consumers. This will directly benefit the industries and open up the electricity market more widely.

Fifth, calculation of power prices will no more be a complicated exercise with so many assumptions, weak account presentations, etc., It will be one rate for all which will throw open the electricity market further leading to industrial growth.

There are only three stake holders in the deal. TANGEDCO, people and the Government. By introducing direct credit of electricity, all three stake holders will gain. There is no reason why we should route the subsidy through TANGEDCO, when there are so many overpowering arguments against it, including the statement of the Power Ministry!