Chandigarh, August 18
After getting the vital “green signal” from the World Bank on providing free power to small farmers, the Punjab Government tonight finally resolved to give this facility to farmers having landholdings up to five acres.

The decision, which is to be made public on August 20 at Hoshiarpur on the birth anniversary of late Rajiv Gandhi, was taken at a high level meeting at the residence of the Punjab Chief Minister, Capt Amarinder Singh, here. The free power will start flowing on September 1.

Sources said that among others who attended the meeting included, Finance Minister, Surinder Singla and Power Minister, Lal Singh. Senior officers of the Finance and Power and other departments were also present.

A delegation of the Punjab Government had already met world bank officials to counter any backlash to the populist step. The World Bank had reportedly agreed not to stop funding projects in view of the impending subsidy on power.

Mr Surinder Singla met World Bank officials in Washington DC, USA. Mr Singla told the Tribune: “The World Bank is not going to back out of any project due to this subsidy and that is very clear. I have discussed this issue with them in detail.”

When the Akali-BJP regime came to power in 1997, they provided free power to all farmers. Subsequently, the World Bank made it clear that it would not provide loans for new projects till power-sector reforms were carried out.

Obviously, as the elections to the Punjab Assembly were nearing, the Punjab Government had started giving sops to various communities. The decision to give free power was clearly to win the support of small farmers, who have been feeling peeved following the withdrawal of benefit of free power by the present government immediately after assuming power.

Soon the Punjab Government would abolish octroi in all towns and cities.

The government had also decided to increase the quantum of free power to poor Scheduled Caste families from 50 units a month to 100 units. According to a governmental estimate, about 10 lakh farmers and Scheduled Caste families would benefit by this decision. The overall burden on the government because of the implementation of this decision would be in the range of Rs 475-500 crore.

The Congress government when it came to power in 2002, had stopped the free power scheme thus opening up a new era with the World Bank which then funded roads and water supply projects. But these development works would carry on, Mr Singla added.

The logic given to the World Bank was that the free power would not be given to all farmers but to just the poor farmers. The shortfall of revenue would be met by the Punjab Mandi Board which was close to Rs 475-Rs 500 crore. Thus the Punjab State Electricity Board would not face any losses or financial crunch. This ill-health of the PSEB, had been earlier objected to by the World Bank.

The burden was expected to be shared by the Punjab Mandi Board and the Rural Development Fund. The farmers, having landholdings above five acre, would continue to get power on subsidised rates. The government now paid subsidy of about Rs 850 crore to the Punjab State Electricity Board (PSEB) to give power on subsidised rate to farmers across the board. A powerful lobby of officers was against giving free power to even limited number of farmers. Even the PSEB’s top brass was also opposed to it.

In fact, the state government had discussed several proposals before zeroing in on five acre decision. A section of ministers and officers had earlier floated that the idea that instead of giving free power to small farmers they should be given energy bonus on production. However, the Power Minister and others insisted that if the ruling party wanted to get any political benefit, it should outrightly give free power to farmers and reject the proposals such as energy bonus which would be difficult for farmers to comprehend.