Fund-hit Himachal Pradesh ends power subsidy to big industry

In the hope of saving about Rs 700 crore annually, the cash-strapped Himachal Government has finally withdrawn the power subsidy being given to the large industry. The power rates, however, still remain the lowest among northern states.

Subsidy on 125 units goes, public hit

• The power subsidy to the large industry ranged from 70 paise to ~1 per unit
• Subsidy for 125 units of free power to people using over 300 units withdrawn too
• Relief in electricity duty, ranging from 2.5 to 9 per cent, for small, medium & large industry

As part of its initiatives to enforce fiscal prudence, the much-awaited orders for the withdrawal of power subsidy to the large industry, ranging between 70 paise to Re 1 per unit, have finally been issued by the Power Department.

Himachal Pradesh being an electricity surplus state, the power tariffs still remain lower than Punjab, Haryana and Uttarakhand. This has been done as the lower tariffs remain the biggest attraction for the industry.

The withdrawal of subsidy, however, comes with a substantial relief in the existing electricity duty, ranging between 2.5 and 9 per cent, for the small, medium and large industry, the cement industry and stone crushers.

The order for the withdrawal of subsidy for 125 units of free power to people consuming over 300 units has also been issued. The quantum of subsidy withdrawn will be Rs 1.03 per unit for domestic consumers falling in the third slab with a consumption higher than 300 units. The 125 units of free power for the lower slabs will continue.

The latest move is part of several initiatives taken by the Sukhu-led Congress regime to cut down subsidies in power, water and transport to improve the fiscal health of the state. At the same time, the cash-strapped government, which is heavily dependent on the Centre for funds, is looking at other sectors like tourism, power and mining to generate additional revenue. However, the industries which are enjoying the benefits and concessions in the electricity duty under the HP Industrial Investment Policy-2019 will continue to get these.

The exclusion of domestic consumers with a consumption of over 300 units will save the state government a substantial amount of money, which had to be provided annually to the Himachal Pradesh State Electricity Board to give relief to the consumers to neutralise the impact of increase in tariff by the state government.