The Centre recently launched a new scheme, the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (or Saubhagya Yojana), to electrify all households in urban and rural areas. Under this scheme free connections will be provided to below poverty line (BPL) households, while other households have to pay ₹500 for the connection, recoverable by the discoms in 10 instalments along with the electricity bills.
While 79 per cent of the 18,400-odd villages were electrified under the Centre’s earlier scheme — the Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY) — launched in 2015, a large number of households still do not have access to electricity. To address this issue of last-mile connectivity, the Centre launched the Saubhagya scheme.
However, there is still a lack of clarity on the charge of tariffs to the end user under the new scheme. Low tariffs could add pressure to the financials of discoms, already hit by years of inefficiencies and subsidised tariffs.
What it entails
The cost of the Saubhagya project is pegged at ₹16,320 crore, of which 60 per cent will be funded by the Centre, 30 per cent by bank loans and the remaining 10 per cent by respective State governments. Of the total outlay, a chunk — ₹14,025 crore — will flow into rural areas.
The electricity connections for households is provided by drawing a service cable from the nearest electricity pole to the house, installing an energy meter, and wiring for a single light point with an LED bulb and a mobile charging point. In case a pole is not available, a new one is erected with a conductor and associated accessories. For remote and inaccessible areas, electricity is provided through solar panels and five LED lights, one DC fan, and one DC power plug can be used. Repair and maintenance for five years is also provided.
The idea behind the scheme is to nudge discoms to supply electricity to all households in villages that have access to meters. Public institutions and panchayats will be authorised to collect applications forms, distribute bills and collect payments in consultation with Panchayati Raj Institutions and urban local bodies. This can address the pain-points of discoms to some extent. About 90 per cent of non-electrified households are in Bihar, Uttar Pradesh, Madhya Pradesh, Odisha, Jharkhand, Assam and Rajasthan.
The target date to electrify all households is set for December 2018 and those States that achieve this by the scheduled time would be given an additional 15 per cent grant by the Centre as incentive.
Pressure on discoms
A chunk of banks’ stressed assets pertain to the infrastructure and power sectors. Operational inefficiencies and low tariffs have led to huge losses for discoms. While the Saubhagya scheme provides free electricity connections, the BPL households will have to foot the bill for electricity usage.
If the tariff rate is highly subsidised, this could again put pressure on the financials of discoms, which are already incurring huge losses. On the other hand, higher tariffs would make payment difficult for BPL households.
Modification from existing schemes
The government introduced the DDUGJY in May 2014 to provide continuous power supply to rural India. The scheme focussed on separation of the feeder (into rural households and for agricultural usage) and the metering to roster the supply and simplify monitoring.
Under this scheme 18,452 villages were targeted to be electrified in 1,000 days, and villages were considered electrified if electricity was provided to public places like schools, panchayat offices, health centres, dispensaries, and community centres, and at least 10 per cent of the households. All the erstwhile schemes including Rajiv Gandhi Grameen Vidyutikaran Yojana were subsumed within the DDUGJY.
Of the 18,452 villages, around 14,600 villages have been electrified. This still leaves around four crore households without access to power. The Saubhagya scheme will hopefully trigger demand and, in turn, force discoms to supply to households.