Delhi’s power subsidy policy helping rich more than poor

Delhi’s power subsidy policy helping rich more than poor


Delhi government's committment to provide power for households at subsidised rates is among the most generous in the country but due to carelessness and disorganization, it is helping rich more than the poor. As per Brookings India research paper, poor get subsidy of around Rs 1,000 per year on average since they consume less electricity, rich people often end up getting a benefit of around Rs 9,000.

This is because of the criteria of how much a household consumes, and presently the subsidy is given to those people whose units in month are not more than 400. Thus, around 80% of households qualify for the 50% subsidy paid with Govt's money. "Sometimes it go high to 95% of households. The middle class, enjoy more benefits of the power subsidy on a percentage basis than the poor. The lowest tier gets under 33% subsidy on net billing on an average, and those utilising just a little under the limit get over 40% net subsidy.

No doubt, Delhi is one of the richest states in the country and has the highest per capita power consumption rate for households. But the Govt. of Delhi is riding on the subsidy to keep tariffs in check. Other states do look for revisions of the policy as well as improving efficiency to reduce tariffs. Aam Aadmi Party government's 2016-17 budget provided Rs 1,600 crore for Delhi power subsidy. If you do the math, you will see that this figure is eight times more than allocation for the Smart City project, more than one-third of the total budget for medical and public health services and nearly 20% of the total budget allocated for education. Check here for Delhi electricity payment online: BSES bill payment online and pay NDPL bill online.

Subsidy given to undeserving consumers can be saved by simple tweaks in the rules, while still maintaining the subsidy for the deserving public.

As per the paper, if subsidy is lowered to consumption of 300 units per month from the current 400 units, almost 30% of the taxpayer will be saved, only about 13% will be reduced. And if subsidy goes down to 200 units a month, it will still cover over half the population (as compared to 80% in the present scenario) but two-thirds would be saved which makes it about Rs 1,000 crore per year.