Saturday, February 13, 2010

Powerless Punjab: How do we get it Right?



How to balance Punjab's "Free Power" equation?

Punjab has no power, still it promises free power to its farmers. And what do the farmers actually get? Power for about 2-3 hours a day, yup that's it. Anything more than that is a luxury. Wudn't it be a better idea to charge farmers the market rate of power and ensure them stable power supply in return. The can of course be compensated by increasing the MSP of produce they bring to the market. This eliminates power subsidy, introduce free market pricing for agricultural produce (though with a premium), and prevent bleeding of state power corporations. Dead weight loss is eliminated and everyone is better off. Agreed increasing the MSP for agricultural goods might spike food inflation, but since everyone is better off, inflation can be brought under control in the medium and long term. Anyone ready to take a bold political decision and stick their neck out? "No one".

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