Kejriwal govt. offers 1 lakhs/yr. income to Farmers in Delhi

Delhi Government has announced a big step for farmers in rural Delhi. They can earn huge income from lifted solar plant in their field which can earn them approximately ₹1 lakh per acre per year in their income. This would be a multi-fold increase from their current incomes, Delhi Chief Minister Arvind Kejriwal informed in a press statement to announce the decisions taken by the cabinet.

To increase the income of farmers in the national capital by three times, the Delhi Government approved a farm solar power scheme to provide an additional income of ₹1 lakh a acre per year to farmers.

The ‘Mukhyamantri Kisan Aay Badhotri Solar Yojana’ (Chief Minister Farmer’s Income Solar Scheme), approved by the cabinet, was first announced as a part of the government’s green budget this year.

Under the scheme, farmers will be able to provide one-third of their land to private companies on rent for ₹1 lakh per acre on a yearly basis. The government said that the rent will increase by 6 percent  each year. The agreement will be for 25 years. The scheme is likely to rolled out by March next year.

According to the statistical handbook of Delhi, the total cropped area in the national capital is 34,750 hectares.

To not hinder farming in the one-third area, the minimum structure height for placing solar plant will be 3.5 meters which will allow passage for tractors and other farming equipments.

Along with rent, the government also plans to provide 1,000 units of electricity per acre free of cost to the farmers. The electricity generated from these solar parks will be used to provide power to government offices. The move would save the government ₹300-400 crore.

The Chief Minister further added “Farmers will also get 1,000 units per acre electricity free. This electricity, the companies will sell to different departments of the Delhi government like Delhi Jal Board. Through this scheme departments can buy electricity for ₹4 per unit against the ₹9 that they are paying right now. This will not only help farmers but also help the government save money and also provide clean energy to Delhi.”

Ms Priya Sreenivasan commented in the Down to Earth that the Delhi  Agriculture Sector offers very little for any of the interested stakeholders involved landowning farmers.

Broadly, the scheme’s aim is to entice solar developers to build power generating plants on agricultural holdings. The farmers are to be paid Rs 1lakh/acre by the developers for leasing the land, with a 6 percent annual escalation.

The premise of the scheme is to supplement farmers’ income, currently estimated at Rs 20,000– 30,000/acre.  Additionally, they are allowed 1000kWh/acre of free electricity generated by the system.

While the purported economics look great for farmers on paper, the math doesn’t add up.

According to the Economic Survey of Delhi 2017-18, the total land area under cultivation stood at 34,750 hectares i.e. 85,870 acres. There is a caveat that caps the maximum land usage of this scheme at 1/3^rd of the total availability, so as to not interfere with agricultural output, as a result of which only 28,337 acres are available.

Going by the assumption that all the stipulated conditions were met, it is theoretically possible to install 4.3GW, far surpassing the 1GW by 2020 target set in the Delhi Solar 2016 policy.

Theory aside, ground realities throw a spanner into the works.

For one, the agricultural landholding is fragmented around the city. Over 77 percent of the holdings belong to small and marginal farmers, who own less than 4 acres each at best. Secondly, a very small portion of Delhi’s population (0.71 percent i.e. 39,457 people, according to the Economic Survey) is engaged in agricultural employment. Within this already small group, it is unclear how many of them are landowners. It is likely that a significant fraction is contract labourers who will receive no benefits.

It is not just the farmers who may not be motivated to buy into the scheme. The developers are to engage with this model under the RESCO (Renewable Energy Service Company) model i.e. they build and operate the plants and earn revenue by selling the power to bulk government consumers such as the Health Department and Public Works Department. The latter are expected to sign a power purchase agreement with the developers on the grounds that they will procure power at lower tariffs, under Rs 4/kWh. This could be a win for the end consumers who pay between Rs 6-9/kWh currently and is also a potentially good deal for solar developers who are dealing with a national market that demands solar tariffs under Rs 3/kW.

However, it remains unclear how this arrangement can be made to work. The government bulk consumers may need to procure power through Open Access which enables large consumers to procure power directly from generators but is subjected to various charges by the DISCOM, transmission company etc whose infrastructure is required to get the power from point to point. This will raise the tariffs well above the Rs 4/kWh that is anticipated and touted as a saving for the Delhi Government.

They may also not be able to get the lowest possible tariff due to the relatively high land costs under the scheme. The land cost at Rs 1lakh/acre is much higher than other sites. Also, the Delhi government scheme stipulates an annual escalation of 6 percent annually. Solar parks, in comparison, have a 5 percent escalation once every two years.