Protecting Power
Punjab is a high-income state with a predominantly agrarian economy, the first in India to achieve universal village electrification and household access. Promises of free power for farmers came at a time when electricity constituted a substantial input in farm costs. Now, though, even as the economic significance of the subsidy has fallen and free power yields few electoral gains, no party in the state can risk eliminating the subsidy. In addition to cross-subsidy from industrial consumers, paying consumers are also charged increasing levels of cess and duties to balance the high cost of subsidies. Populist inertia strains the ability of any one actor to break from the status quo. On the supply-side, high-cost, long-term contracts signed over the last five years with private generators have curtailed the potential benefits of demand-side management (since far from curbing demand, the utility needs to encourage it) and renewable energy (with a supply glut, no one has an appetite for new sources of energy, however virtuous they may be).