As rollout of solar-pump scheme is delayed, Bihar offers higher diesel subsidy to farmers

The delay in the launch of the solar irrigation pump scheme which the Centre announced in the previous Budget has left States like Bihar with no option but increase diesel subsidy offered to their farmers.

The Nitish Kumar-government in Bihar received nearly 23 lakh applications for diesel subsidy from farmers in the current rabi season, which is more than those received in the previous seasons. This is because Bihar is currently reeling under a major drought in which 280 of the 534 blocks in the State are affected.

In October last year, in view of the drought, the Bihar government decided to enhance the diesel subsidy for five rounds of irrigation as compared to three rounds earlier. The increase in subsidy comes in light of KUSUM (Kisan Urja Suraksha evam Utthaan Mahaabhiyan), the Centre’s solar pump distribution scheme, taking longer to kick off.

This scheme was first announced in the Union Budget 2018-2019. A Cabinet approval for this scheme came almost a year later in February 2019.

“Our aim is to de-dieselise the farm sector. The budgetary framework and implementation are also in place. We could not finalise the tenders for the solar pumps because the Model Code of Conduct (MCC) is in force. Once the MCC is lifted, the tenders will be finalised and the scheme will kick in,” an MNRE official told BusinessLine.

Farmers in Bihar are paid a subsidy of ₹50 a litre and a farmer with one acre of land gets subsidy for 10 litres of diesel for each round of irrigation.

According to official data, as many as 22.93 lakh farmers applied for diesel subsidy during the 2019 rabi season, while the number of applications received during the last kharif season was 19.38 lakh. Out of these, around 15.64 lakh farmers got a diesel subsidy worth a total of ₹195 crore in the kharif season alone.

The roll out of KUSUM has been long overdue. According to Cabinet approval for the scheme, the Centre will provide ₹10,000 crore for four years.

The Indian Renewable Energy Development Agency (IREDA) will borrow ₹6,000 crore for the first phase (lasting for a year) to fund the Centre’s contribution. IREDA will next borrow ₹15,000 crore for the second phase that will last for a year.

Under the original scheme, on a per pump basis, the Centre will subsidise 30 per cent of the cost, the State will do the same, and 30 per cent of the amount will be offered as a loan. The farmer has to give an upfront cost of 10 per cent and then pay the instalments to the bank.

KUSUM was envisaged to replace nearly 2 crore electric and 75 lakh diesel pumps over 10 years.

sources@Bussiness line