In the Traps of Subsidy Syndrome

India's power utility remains vulnerable to the provision of irrational subsidies by the political parties in various states. In this line, the power utility in the state of Punjab despite being efficient in electricity generation has to bear the inefficiency burdens due to state's granting of either partial or full price concessions on electricity sale to the agriculture sector. Its plight becomes more painful when the distribution of subsidy benefits remains largely skewed in favor of the medium and large farmers. The poor small farmers remain excluded and their plight continues due to their dependence on dearer diesel pump-set based irrigation. Thus, the study questions the justification of granting 'across the board' electricity subsidy to the agriculture sector. It also explores the possibilities on the demand side to replace the populist practices of granting these subsidies to the agricultural sector. The positive response of a large set of farmers regarding their willingness to pay electricity charges under the conditions of adequate and reliable electricity availability provides a ray of hope to the electricity utility in Punjab.