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Goaltide Daily News 2021

Jul 14, 2021

News 1:
Gene-editing stops virus transmission within human body

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News 2:
Palaeolithic cave paintings found in corner of NCR could be among oldest

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News 3:
People have been consuming giloy since the outbreak of COVID-19

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News 4:
Why Centre’s new rules for digital media face legal test

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News 5:
IPOs: Three truths

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News 6:
KUSUM wilts under poor planning

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Prime Minister Narendra Modi in his Independence Day speech in 2018 hailed the Pradhan Mantri Kisan Urja Suraksha Evam Utthaan Mahabhiyan (PM-KUSUM) scheme as a saviour for the farmers. Announced in the Budget the same year, Modi said with this solar farming scheme, “farmers can now earn money from farming and at the same time earn by selling the extra solar power generated at their farms”.

The goal was to de-dieselise the farm sector by replacing diesel pumps with so­larised ones. It would also reduce the burden on state-owned discoms that have to supply subsidised electricity to the agriculture sector. At the same time, discoms were to buy the excess solar po­wer generated by these installations, giving farmers another source of income.

Since then, the same scheme has been announced in several “reform packages” and Union Budgets with varying budgetary allocation by the Centre and reduced incentives.

When the scheme was first ann­ou­n­ced, it had an outlay of Rs 1.4 trillion, inc­luding budgetary support of Rs 48,000 crore, over 10 years. The scheme required initial funding of close to Rs 28,000 crore.

But the finance ministry said these sums were too high and asked the ministry of new and renewable energy (MNRE), the nodal department for the scheme, to rework the numbers and, as government officials told this paper, to look at “alternative funding modes for the KUSUM scheme”.

At the same time, states like Gujarat and Maharashtra were already installing solar pumps under their own schemes. “These states were reluctant to mer­ge their schemes with a central program­me and let the Centre take the credit for incentivising irrigation for the farmers, since this impacts electoral politics, too,” said an executive of a solar goods firm who participated in these state tenders.

By the end of 2018, MNRE decided to get the Indian Renewable Energy Development Agency (IREDA), a state-owned finance company focused on ren­ewable energy, to raise the required fu­n­ds. But that plan, too, went nowhere, the principal reason being a funds crunch.

In July 2019, the scheme found mention again in the Budget speech, the first for the second term of the Narendra Modi government. The new finance minister, Nirmala Sitharaman, said, “Annadata can also be Urjadata.”

In the same month, the MNRE issued an order targeting solar capacity of 25,750 Mw by 2022 under the PM-KUSUM scheme with central financial support of Rs 34,422 crore.

Energy Efficiency Services Limited, or EESL, the state-owned energy services company, issued a tender for off-grid solar water pump sys­tems across India under PM KUSUM; 181,200 solar pumps were to be installed. The price of pumps was cut 60 per cent owing to the large size of the tender. There is no public data on the installations but senior officials claim the target would be met.

Yet, in 2020, the finance ministry again introduced more changes. Refer­r­ing to her July 2019 statement in the February 1, 2020, Budget speech, Sitha­raman announced, “The PM-KUSUM scheme removed farmers’ dependence on diesel and kerosene and linked pump-sets to solar energy. Now, I propose to expand the scheme to provide 20 lakh (two million) farmers for setting up stand-alone solar pumps; further we shall also help another 15 lakh (1.5 million) farmers solarise their grid-connected pump sets. In addition, a scheme to enable farmers to set up solar power generation capacity on their fallow/barren lands and to sell it to the grid would be operationalised.”

None of the announcements was “new” as such but amounted to repackaging, reflecting the slow progress of the scheme.

Then in November 2020, the central financial support for the scheme was scaled down to Rs 34,035 crore and the 2022 target upped to 30.8 Gw.

At the same time, the obligation on discoms to buy solar power from farmers was removed. Commenting on the impl­e­mentation of the KUSUM scheme, power minister R K Singh had said in 2020, “Irrigation is required in fields for hardly 150 days a year. For the remaining roughly 200 days, the electricity generated from solar pumps distributed under the KUSUM scheme will be available free of cost to the state government’s discom.”

This significant decision removed the financial incentive for farmers to adopt solar-powered pumps.

This year in January, EESL issued another tender for off-grid/standalone solar pumps totalling 317,000 to be set up across all states and Union Territories. This ambitious plan has run into legal trouble. Close to a dozen companies that participated in the tender have moved Delhi High Court alleging that the bidding process lacks transparency.

Executives said around 30 bids were dropped from the technical round of the bidding without any clarification. Delhi High Court has directed the Union of India to respond to these allegations.

A senior sector executive, requesting anonymity, said the MNRE and EESL both refused to clarify to the players why the bids were dropped. He said it is clear from the actions of EESL that it is “picking and choosing” companies.

In the middle of this, the Centre has repackaged KUSUM scheme — again. It is now part of the new reform program­me for state-owned discoms — the second for this government. The scheme would have an outlay of Rs 303,758 crore with an estimated gross budgetary support of Rs 97,631 crore. All power sector reform schemes, including PM-KUSUM scheme, would be subsumed into this umbrella programme.

Singh said once the feeder separation for agriculture was done, farmers would effectively be getting free power from solar-run irrigation systems. “Agriculture subsidy would cease to exist in the next four to five years if the discoms are able to solarise the agriculture feeders. Farmers will get free power during the day and discoms would be able to redirect that amount of electricity to other consumers,” Singh said.

Agriculture remains the most subsi­dised electricity consumer. In some parts of India, it leads to waste of both electri­city and water, and in others, due to intermittent power supply, heavy dependence on diesel gensets. A paradigm shift thro­ugh a scheme that is yet to find a coherent plan looks increasingly bleak.