• Delhi’s power subsidy policy helps rich more than poor

    Delhi government’s policy to subsidise power for households is undoubtedly among the most generous in the country but it is benefiting the rich more than the poor due to inefficiencies.

    While poor households on an average get subsidy of around Rs 1,000 per year as they consume less electricity, rich households end up benefiting by Rs 9,000, a Brookings India research paper has said.

    This is happening due to the combined impact of the eligibility criteria, which is based on how much one consumes, and the high subsidy cut-off point of 400 units a month.

    As a result, around 80 per cent of households qualify for the 50per cent subsidy paid with taxpayer’s money. “In some months, this goes as high as more than 95 per cent of households. This is beyond cross-subsidies approved by the Delhi Electricity Regulatory Commission in the tariffs that keep household power prices lower than cost,” the paper written by Brookings India fellow Rahul Tongia said.

    “Mid-level consumers, ostensibly the middle classes, enjoy more benefits on a percentage basis than the poor. The lowest tier gets under 33 pr cent subsidy on net billing on an average, while those using a little under the limit get over 40 per cent net subsidy,” the paper added.

    Delhi is one of the richest states in the country and has the highest per capita power consumption for households. Mark Barron Jersey

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