[op-ed snap] Rethinking KUSUM

CONTEXT

• Earlier this year, the Cabinet approved the Kisan Urja Suraksha evam Utthaan Mahabhiyan (KUSUM).
• There is a budgetary allocation of ₹34,000 crore to KUSUM and a similar contribution is expected from the States.

Features of KUSUM

• KUSUM aims to provide energy sufficiency and sustainable irrigation access to farmers.
• Objective – Providing financial and water security to farmers.
• The components of the proposed scheme are
  1. Component-A: 10,000 MW of Decentralized Ground Mounted Grid Connected Renewable Power Plants.
  2. Component-B: Installation of 17.50 lakh standalone Solar Powered Agriculture Pumps.
  3. Component-C: Solarisation of 10 Lakh Grid-connected Solar Powered Agriculture Pumps.

Current Situation

• Despite growing farm power subsidies, nearly 30 million farmers use expensive diesel for their irrigation needs.
• This is because they have no access to electricity. More than half of India’s net sown area remains unirrigated.
• KUSUM could radically transform the irrigation economy if the government chooses an approach of equity by design and prudence over populism.

Approach of Equity 

• Reducing disparity among States with regard to solar pumps deployment and irrigation access should be the first aim.
• This disparity highlights poor State budget allocation towards solar pumps and the lack of initiative by State nodal agencies.
• To encourage equitable deployment, the Centre could incentivise States through target linked financial assistance and create avenues for peer learning.
• Addressing inequity within a State – This is addressed by a share of central financial assistance under KUSUM should be appropriated for farmers with small landholdings and belonging to socially disadvantaged groups.
• By providing greater financial assistance to smaller farmers, instead of a one­size­fits­all approach.
• KUSUM proposes a 60% subsidy for the pumps, borne equally by the Centre and the States, and the other 40% will be the farmer’s contribution.
• This will exacerbate the inter farmer disparity given the inequity in access to credit and repayment capacity between small and large farmers.
• A more economical and equitable alternative – A higher capital subsidy support to small and marginal farmers and long-term loans with interest subsidies for large and medium farmers.

 Prudence over populism

• Solarising existing grid connected pumps needs a complete rethink.
• Existing grid connected farmers would receive the same financial support as that received by an off-grid farmer.
• In addition, the farmer would earn regular income from the DISCOM on feeding surplus electricity, furthering the inequitable distribution of taxpayers’ resources.
• Instead of this, the scheme should only provide Central government subsidy of up to 30% for solarisation, and use the proposed State support to incentivise DISCOMs to procure energy from the farmers.
• Instead of feeding surplus energy to the grid, solar pump capacity could be used to power post harvesting processes, which complement the seasonal irrigation load.
• The entire feeder could be solarised through a reverse bidding approach, and provide water conservation linked incentives to farmers as direct benefit transfer.