PM Kusum Yojana in trouble as Farmers facing problem in getting funds from Banks

Central government’s Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan, popularly known as PM Kusum yojana aimed at helping farmers with extra income from their infertile and semi-fertile land through solar projects is facing problems from banks who are not willing to finance the units. Of 170 cultivators who have signed deals with discoms to set up solar plants, only around 15 have begun working on the projects while the remaining are delaying it as they are not able to get bank funding.

According to a senior official at Rajasthan Renewable Energy Corporation Ltd (RRECL), banks have developed cold feet to fund the projects because of 2 reasons. First, he told, there are concerns that discoms do not have a good track record of paying for power on time. Second reason is, in case of a non-payment, they cannot take away the farmer’s land given the sensitivity of the issue.

Officials said, “Land is a good collateral. But since these are farmers, their land cannot be seized in case of a default. Banks want other collaterals for funding the projects, but farmers don’t have or give other assets. As per the agreement, discoms buy the power, but the track record of their payments to other projects has been very poor. So bankers are wary of these projects”.

A State Level Banking Committee (SLBC) official told TOI that the boards of the banks have not taken any decision to fund such projects. The official on anonymity told “We have had a discussion on backing these projects but unless our boards decide & take a decision, we cannot lend to these projects”.

The PM-Kusum Yojana was launched in March 2019. Rajasthan was the first state in India to invite expression of interest from the farmers & complete the application process by March 2020.

Out of the 623 cultivators who were selected based on their application, 201 have submitted the security money at Rs 5 lakh per megawatt. But only 170 have inked agreements with the discoms.

Rajasthan Electricity Regulatory Commission has set Rs 3.14 paisa / unit of power for these projects that the industry feels the price is very low given the small size of these projects. Even investors can collaborate with the farmers to set up the projects and can pay a rental to them.