After a blockbuster performance in the state elections, actor Vijay, who officially became Chief Minister C. Joseph Vijay on Sunday, announced free power to the domestic category, almost on the pattern of Punjab where free power was first introduced in the late 90s.
Free power in Punjab swallows roughly 10 per cent of Punjab’s Budget after it became the major poll plank of almost all political parties in the fray.
The Tamil CM greenlit 200 units of free electricity bi-monthly for all eligible domestic consumers, fulfilling a major poll promise made by the TVK chief.
The benefit would be applicable to consumers with bi-monthly power consumption of up to 500 units, while the existing tariff structure, including free supply of 100 units once in two months, will continue for others.
Compared to Punjab, which is facing outstanding debt projected to approach the Rs 4.50 lakh-crore mark during the 2026-27 financial year, Tamil Nadu is far ahead at Rs 10 lakh crore. Vijay announced 200 units of free electricity every two months for domestic consumers, which would cost the government around Rs 1,730 crore per year.
Comparative analysis shows how Punjab’s free power supply to various categories stands at around Rs 15,500 crores. Interestingly, whenever free power is announced, it starts with a particular section or category and slowly crawls into other categories of consumers. Sample this: in Punjab, Rajinder Kaur Bhattal, who served as the Chief Minister for a few months, first instituted an electricity subsidy for farmers in January 1997.
She had promised free electricity to farmers with up to 7 acres of land. Farmers with greater landholdings were required to pay Rs 50 per horsepower for motors to pump out groundwater. The subsidy bill amounted to Rs 604.57 crore in 1997-98.
Later, Parkash Singh Badal, who took over on February 12, 1997, promised power subsidies to all farmers. When Capt Amarinder Singh became the CM in 2002, he imposed a fee on farm motors (Rs 60 per horsepower), claiming depleted funds. However, due to political pressure, he was forced to reinstate free power in November 2005. In 2005-06, the subsidy bill surpassed Rs 1,000 crore for the first time, reaching Rs 1,435 crore.
That year, the farm subsidy alone totalled Rs 1,385 crore. In 2007-08, the overall subsidies exceeded Rs 2,000 crore with the bill rising to Rs 2,848 crore. Of this amount, Rs 2,284 crore was the cost of free electricity to the farm sector. In 2009-10, the electricity subsidy bill rose to Rs 3,144 crore, with the agriculture sector alone accounting for Rs 2,804 crore. It was Rs 4,188 crore in 2011-12, while the free farm power bill was Rs 3,879 crore.
In 2012-13, the overall subsidy was Rs 5,059 crore, with agriculture garnering Rs 4,787 crore of funds. At present, the Punjab government has allocated Rs 15,550 crore for power subsidies in the state budget, with a major portion earmarked for free electricity to farmers and domestic consumers.
Experts suggest that, for now, free power to domestic consumers in Tamil Nadu will not be a huge burden for the state, which is almost double the size in terms of population and double the number of Vidhan Sabha seats.
“The problem arises when other categories also demand free power, and then the politics of freebies takes over, as rival parties try to be more liberal when it comes to category-wise free power as a pre-poll plank,” says a power sector expert.
The classic example is that of Punjab, where successive governments continue to swallow the bitter subsidy pill; the concession for the power sector alone now accounts for 12 percent of Punjab’s budget.
Politics over ‘power’ Successive governments have failed to take a stern view of the rising power subsidy bill and falling groundwater as paddy continues to burn a hole in government pockets. Bowing to farm unions, political parties announce in advance that once voted to power, “free power to farmers will continue.”
Be it the Congress government or the SAD-BJP coalition, power subsidy has become a norm. The ruling AAP administration went a step further, announcing and providing free 300 units to domestic users, in addition to the agriculture sector and those below the poverty line. Rising debt The average state debt from 2012 to 2022 rose by roughly Rs 20,000 crore per annum.
In the past four years, it has been rising at the rate of approximately Rs 44,000 crore per annum, which means that the total debt on Punjab would reach nearly Rs 5 lakh crore by 2027. “Such a huge debt will affect investments, which will ultimately lead to a rise in unemployment. Therefore, Tamil Nadu needs to be cautious when it comes to free power and freebies for the state’s residents already trapped in a rising debt trap,” says an economist.
