Throwing fiscal prudence to the wind, the Congress-NCP government in Maharashtra Friday decided to waive Rs 7,394 crore farm electricity arrears till March 31, 2014. Despite mounting debt, rising revenue deficit and a stern warning by the bureaucracy, the state Cabinet Friday cleared the proposal and Deputy Chief Minister Ajit Pawar announced the waiver later in the day in the state legislative assembly. Pawar heads both the energy and finance departments in the state government.
Chief Secretary Jageshwar Saharia noted in the proposal that it was not the right thing to do. The state's finance department cautioned fiscal management would collapse and the energy department opined such a move wasn't in the best interests of the state and the power sector.
But the ruling alliance, desperate to revive its political fortunes following the Lok Sabha rout, opted to overlook these objections.
The dole comprises a 50 per cent waiver on outstanding principal amount of farm electricity arrears due till March 31, 2014. Absorbing this means the state exchequer will have to shell out Rs 2,837 crore to Mahavitran, the state-run electricity distribution company. Defaulting farmers are required to pay the balance 50 per cent of outstanding principal in three installments till October 31 this year.
According to estimates provided by the energy department, the total outstanding principal amount works out to Rs 5,673 crore. The amount to be recovered in interest and fines — Rs 4,417 crore — has also been waived.
The dole also includes a three-month electricity waiver for farmers who have paid dues in time. The energy department has estimated another revenue loss of Rs 140 crore owing to free electricity supply to non-defaulting farmers for three months.
At the time of presenting his 'additional budget' for 2014-15 on June 5, Pawar had estimated a revenue deficit of Rs 4,103 crore and a fiscal deficit of Rs 30,965 crore. On top of this, he raised supplementary grants worth Rs 20,388 crore on Thursday. The state legislature approved these Friday.
A senior minister said the decision came following intense pressure from the leadership of both parties in the Marathwada belt where the farm electricity arrears are the highest. The government had earlier taken a decision to impose load shedding in higher defaulting areas. The move is aimed at rendering even such regions load shedding-free till elections, he added.
As an option, the state bureaucracy had suggested to limit the waiver to two years (from April 1, 2012 to March 31, 2014). This would have restricted the burden to Rs 2,699 crore. Though Rural Development Minister Jayant Patil backed this during the Cabinet meeting, sources said the Marathwada ministers pushed aggressively for a complete waiver. Finally, it was left to Chief Minister Prithviraj Chavan to decide the best course. The CM sought the most populist option.
Source- Indian Express