KUSUM wilts under poor planning: Multiple repackaging impacts its success

Relevance: Power is one of the most important inputs for India’s agriculture sector.

Synopsis:

Multiple repackaging has impacted the success of this four-year-old flagship scheme to de-dieselise agriculture through solar-powered pump sets.

Background:

• The PM-KUSUM (Pradhan Mantri Kisan Urja Suraksha Evam Utthaan Mahabhiyan) scheme was launched in 2018 as a saviour for the farmers.
• 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.

Objectives of the scheme:

• 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 subsidized 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.

Progression of the scheme and associated issues:

• In 2018,  it had an outlay of Rs 1.4 trillion, inc­luding budgetary support of Rs 48,000 crore, over 10 years.
  • First Issue: The finance ministry said these sums were too high. It asked the ministry of new and renewable energy (MNRE) to rework the numbers and look at “alternative funding modes for the KUSUM scheme”.
  • Second issue: States like Gujarat and Maharashtra were already installing solar pumps under their own schemes. They were reluctant to mer­ge their schemes with a central program and let the Centre take the credit for incentivising irrigation for the farmers.
• By the end of 2018, MNRE decided to get the Indian Renewable Energy Development Agency (IREDA) to raise the required fu­n­ds. But that plan, too, went nowhere, the principal reason being a funds crunch.
• In July 2019, the MNRE issued an order targeting a solar capacity of 25,750 MW by 2022 under the PM-KUSUM scheme with the central financial support of Rs 34,422 crore.
• Energy Efficiency Services Limited (EESL) 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 percent owing to the large size of the tender.
  • Third issue: There is no public data on the installations, but senior officials claim the target would be met.
• In the February 2020 budget speech, the scheme was expanded to support 20 lakh farmers for setting up stand-alone solar pumps and help another 15 lakh (1.5 million) farmers solarise their grid-connected pump sets.
  • Fourth issue: 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 increased to 30.8 Gw. At the same time, the obligation on discoms to buy solar power from farmers throughout the year was removed. 
  • Fifth issue: The removal of obligation on discoms acted as a disincentive for farmers towards the adoption of solar-powered pumps.
• In January 2021, EESL issued another tender for off-grid/standalone solar pumps totalling 317,000 to be set up across all states and Union Territories. 
  • Sixth issue: This ambitious plan ran into legal trouble. Close to a dozen companies that participated in the tender have moved to Delhi High Court against the bidding process for lacking transparency.
• The Centre has again repackaged the scheme in 2021. It is now part of the new reform program­me for state-owned discoms. 
  • 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 the PM-KUSUM scheme, would be subsumed into this umbrella programme.

Way Ahead:

• The government believes that once the feeder separation for agriculture was done, farmers would effectively be getting free power from solar-run irrigation systems.
• Agriculture subsidies 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.