Bihar Offers High Diesel Subsidy to Farmers after delay in Launch of Solar Irrigation Pump Scheme

The delay in the launch of solar irrigation pump scheme that the Central Government had announced in its previous Budget has left States like Bihar with no alternative but to raise diesel subsidy offered to the farmers.

Nitish Kumar led Bihar government had received around 23 lakh applications for diesel subsidy from the farmers in the current Rabi season and this is more than it got in the previous seasons. This is because the state is presently reeling under a major drought wherein 280 of the 534 blocks are badly affected.

In October 2018, considering the drought, the state government had decided to improve the diesel subsidy for 5 rounds of irrigation as compared to previous 3 rounds. It must be noted that the rise in subsidy comes in light of Kisan Urja Suraksha evam Utthaan Mahaabhiyan (KUSUM), the Central government’s solar pump distribution scheme, which is taking a long time to start.

This scheme was first announced in the 2018 to 2019 Union Budget and a Cabinet approval for the same came after one year i.e. in February 2019.

An MNRE official told BusinessLine that “Our motive is to de-dieselise the farming sector. The budgetary framework & implementation are in place but we could not finalise the tenders for the solar pumps as the Model Code of Conduct (MCC) is in effect. Once the Model Code of Conduct is lifted, the tenders will be finalised & the scheme will start”.

Farmers in Bihar are given a subsidy of Rs. 50 a litre and those with 1 acre of land gets subsidy for ten litres of diesel for each round of irrigation.

As per official data, around 22.93 lakh farmers had applied for diesel subsidy in the current Rabi season and the number of applications obtained during the previous kharif season was 19.38 lakh. Out of these, nearly 15.64 lakh farmers received diesel subsidy worth Rs. 195 crore in kharif season only.

The roll out of Kisan Urja Suraksha evam Utthaan Mahaabhiyan has been long delayed. As per Cabinet’s approval for the scheme, the government will give Rs. 10,000 crore for 4 years.

The IREDA or Indian Renewable Energy Development Agency will borrow Rs. 6,000 crore for the 1st phase (1 yr) to fund government’s contribution. Next, the IREDA will borrow Rs. 15,000 crore for the 2nd phase.

Under the original scheme, on a per pump basis, the central government will subsidise 30 % of the cost, the State government will do the same and 30 % of the amount will be provided as a loan. The grower will have to give a straight cost of 10 % and then give the instalments to the bank.