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Tuesday, October 17, 2017

Saubhagya scheme

Thursday, 12 October 2017 13:50
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Prime Minster Narendra Modi's announcement of providing universal access to electricity in rural and far flung areas in the country appears to be old wine in new bottles. Similar announcements and long-standing promises have been made by the central government in the past also but the realisation of such a scheme has been lacking support on infra-structural front in most parts of the country. For making this scheme a success, the NDA-government will require not only budgetary fund allocation but also infra-structural issues that plague the broken power sector. The Prime Minister Sahaj Bijli Har Ghar Yojana, or the 'Saubhagya' scheme, launched by Narendra Modi aims to make electricity accessible to every household by the end of 2018. Under the scheme, this is expected to cost over Rs 16,000 crore, poor households that have no access to electricity will be provided power connections free of cost by the central government. This builds on previous work carried out under the Deen Dayal Upadhyaya Gram Jyoti Yojana launched in 2015, and the Rajiv Gandhi Grameen Vidyutikaran Yojana launched by the UPA government in 2005, both of which also aimed to provide free electricity connections to the poor. In particular, it hopes to improve electricity access within villages that are already classified as 'electrified', according to the criterion that 10 percent of households enjoy access to electricity. In fact, the Rural Electrification Corporation of India, launched by the central government more than 30 years back was also aimed at providing infra-structural network for electrification of rural and far-flung areas so that people could have access to power supply. But that initiative was lacking sufficient funds to provide electrification of more than one-third of the villages in the country. Even some of the villages which had such facilities, the people did not apply for connections due to affordability issues. Similarly, the Saubhagya scheme does not serve any purpose to address the real problem of affordability. In fact, by failing to account for illegal connections taken by households which find it difficult to afford legal access to power, the government data on electricity accessibility understate penetration. Apart from what has been happening in the hinterland across India particularly, the rural and far flung areas on other developmental concerns, more than one-third of the villages have not been electrified till date. The issue of free electricity connection can ease the financial burden on the poor to some degree, but it will not address the problem of recurring burden of power bills. The aim of improving affordability would require that supply be increased drastically to lower the price paid by retail consumers. It is surprising that the central government's claims that India is a power-surplus nation, the power generation utilities remain vastly under-utilised. The plant load factor (PLF) of coal and lignite-based plants, an indicator of capacity utilisation of power generation units, has dropped consistently over the decade from 77.5 percent in 2009-10 to 59.88 percent in 2016-17, according to data from the Central Electricity Authority. This is mainly due to demand for electricity from state distribution companies dropping in tandem with their deteriorating financial status. The Ujwal DISCOM Assurance Yojana (UDAY), introduced two years ago to restructure the debt of state distribution agencies, has failed to make enough difference to this state of affairs. The outcome is not surprising, given that UDAY has failed to address the root problem of populism in the pricing of electricity. Already most of the state distributions companies are facing the problem of mounting Transmission and Distribution (T&D) losses in the course of evacuating power to the end consumers. This is mainly attributed to theft of power due to temporary connections availed by the floating populations settled on the outskirts of the urban centres and paying very little or no electricity charges to the government agencies. In the absence of the freedom to sell at a profitable price, distribution agencies have had very little incentive to demand more electricity from power generators, as is evident in the constantly falling PLF. This in turn holds back investment in power generation units. Saubhagya, unfortunately, does very little to address the fundamentals of India's crippling power problem amid rising demand on annual basis.


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