Mamata plans power subsidy, even with exchequer in the red

West Bengal might be reeling under debt but chief minister Mamata Banerjee is apparently mulling a power subsidy to shield domestic consumers from the rising tariffs.

Banerjee heads the power portfolio in her cabinet.

“This is to cost the government about Rs 90 crore a month, about Rs 1,100 crore a year,” said an official in the West Bengal State Electricity Development Corporation. Power secretary Malay De refused to comment on the issue.

On Tuesday, finance minister Amit Mitra had said that with an accumulated debt of Rs 1.86 lakh crore, “every child in Bengal is born with a liability of nearly Rs 22,000 — the highest per capita debt in the country”.

The condition of the treasury worsened particularly in the first 19 days of April, he had said, with an 81% rise in negative balance, amounting to Rs 3,251 crore.

The combination of debt and low revenue is so acute that more than 90% of the tax revenue is spent on paying past debt obligations and the state has been borrowing to keep salary and pension flowing.

An overall expenditure overdrive led to a revenue deficit of Rs 16,441 crore in 2010-11. Even Bihar has a revenue surplus of Rs 6,795 crore and Orissa a revenue deficit of Rs 7,655 crore.

“The current average tariff now stands at Rs 4.27 per unit, but with Coal India due to revise wages in July-August, coal prices will rise again,” another official said. With 97% of the state’s power being thermal, the price of coal is a crucial determinant of power prices in Bengal.

The tariff is determined by the State Electricity Regulatory Commission (SERC). The state has no role in it. But Banerjee has already vented her displeasure about the tariffs, officials said. Though she is yet to announce a power policy, it is unlikely that she will allow the SERC to pass on the burden to the consumers.

“Within the next one to two months, power companies will submit new tariff petition to the SERC,” said an official.

Experts, however, feel the subsidy will be only for the poor and lower middle class, who are at the bottom of the consumption pyramid.