Guaranteed to please no one

The Congress in Karnataka has come to power mainly because of the ‘5 guarantees’. At least two of the five, Gruha Jyothi and Gruha Lakshmi, seem to have been announced without any due diligence. None would have questioned if the party had announced 100 units of free power instead of 200 under Gruha Jyothi or Rs 1,000 per head of the family under Gruha Lakshmi instead of Rs 2000 in their election manifesto. The Congress government has now encountered hurdles in their implementation, resorting to amendments with stiff riders on the eligibility criteria.

The five ESCOMS will mine the data on household electricity consumption for the last 12 months to arrive at an average monthly power consumption for all the households and for each revenue register (RR)-numbered metre. The monthly average will then be topped up with an additional 10% as a buffer to arrive at the monthly ceiling limit for which households will be eligible. The overall ‘capping’ is still 200 units, but no household will get 200 units of free power as a matter of right or entitlement.For example, if the 12-month average consumption is 100 units, the ceiling fixed will be 110 units per month, inclusive of the 10% buffer.

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Consumers whose power consumption aligns with the fixed ceiling will receive a “zero” bill and will be free. If the bill exceeds the fixed ceiling limit, the consumer will pay for only the excess units consumed over and above the ceiling limit but within the maximum limit of 200 units (in this case, units above 110 but below 200 will be charged). If the consumption exceeds 200 units, the entire bill amount must be paid by the household without any concession.The scheme will come into effect in July 2023, which will be reflected in the bill payable in August.

With adequate due-diligence, the government could have developed a simple, smart and efficient model for implementation:

Out of 2.16 crore consumers or households, 2.14 crore consume less than 200 units per month. So, the government should have honoured its promise of 200 free units by extending the benefit to all the 2.14 crore households without fixing the monthly ceiling (but to be kept for reference and incentivisation), differential calculation, or recalibrating the metres.

The government’s fear of misuse by consumers if 200 units of free power are accorded to all 2.14 crore consumers is unfounded, as the average usage numbers show that the households have no high-consumption gadgets such as ACs and geysers.

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Further, to prevent misuse, the households can be incentivised monetarily on the ceiling assigned once every six months, slab-wise (60 units ceiling: Rs 1500; 110 units ceiling: Rs 750; and 150 units ceiling: Rs 500, and so on). This will help reduce administrative work, and honour the promise of 200 free units to all. And incentivising households to restrict usage to the 12-month average will ensure power savings, provide additional money to households, and ensure savings and longer tenancy.

To prevent fictitious or bogus tenants, the scheme should insist on rental agreements on Rs 10 non-judicial stamp paper. The registration of rental agreements at the SRO should be made mandatory without any fees. This ensures the recording of the tenancy in the registry, eliminates bogus tenants, and helps in recovery under the SARFAESI Act.

The scheme should be amended to address an anomaly in clearing bill arrears. The current provision states that arrears up until June 2023 can be cleared by Sept 2023. However, since the scheme is effective from July 2023 and the August bill reflects a ‘zero’ bill or the amount as per the scheme, it is necessary to amend the scheme to allow payment of arrears by the end of July to claim the benefit. Otherwise, power connections may be disconnected in October.

Additionally, to avail of the benefit, it should be compulsory to collect 100% of property tax arrears.

Building plan approval should be mandatory during the application process, ensuring physical checks by competent authorities to prevent plan violations, multiple units with a single RR number, and bogus claims. This will serve as a valuable data bank for future implementation of ‘Akrama Sakrama’ scheme. 

The Power Ministry needs to promptly review power purchase agreements (PPAs) with vendors and renegotiate for lower rates. This is crucial for cost savings, especially considering the substantial debt burden of Rs 72,114 crore as of December 31, 2022.

The government should explore monetising future receivables from tariffs to partially offset the expenses of welfare schemes.

Additionally, the government can request that corporates and software companies allocate a portion of their yearly Corporate Social Responsibility funds to help defray the expenses of the scheme, even if the contribution is relatively small.
Revisiting the scheme based on these suggestions will ensure that the benefits reach the intended target group and prevent misuse.

(The writer is a former banker)