Electricity Amendment Bill 2020: Why Does It Trouble The Farmers?

The farmers are protesting the Electricity (Amendment) Bill, 2020 in addition to the three farmer bills in Delhi. The Bhartiya Kisan Union (BKU) spokesperson Rakesh Tikait clarified in a media address that the impact of the regulations in this bill has been sorted. The government has given a verbal assurance that the bill will be scrapped. While the talks are on a positive line, a grey area remains until the law is officially repealed.

The bill was brought out to make the sector consumer-centric, promote ease of doing business, and promote ideals of good governance, namely, transparency, and accountability. All this, while ensuring the sustainability of power sector and promoting green energy. This bill has been in news since early 2020. What does the new amendment say?

The Electricity (Amendment) Bill, 2020 seeks to amend the existing Electricity Act, 2003. The earlier act has recommendations around power generation, distribution, trading, and use of electricity across industries. It also sets framework for devising and enforcing rules and regulations for electricity by the regulatory authorities in the power sector. The first few amendments to this act were introduced in 2014. 

The recent amendment under Section 65, proposes Direct Benefit Transfer (DBT) to transfer subsidies directly into the consumers’ accounts. The provision is made in line with correcting the financial health of discoms, which are mostly state-owned. The farmer would have to pay for the electricity subsidy and will be reimbursed by the government at a future date. However, this shift-in-subsidy burden has brought about insecurity in the farming community. The farmers are sceptical about accepting this model due to previous bad experiences regarding timely subsidy repayment.

The once bitten twice shy cultivator, after the delayed LPG subsidies payment in recent times has become sceptical about government prompt repayment as promised. The farmers are already heavily dependent on loans at high interest rates, particularly from middlemen. They require aid, from the purchase of seeds, along the entire supply chain, up to the final step of sales to the customer. The additional expenses to pay first and then await reimbursement seems unfair to the farmer groups. The resentment has now aggravated to voicing out their discontent against electricity producers such as Adani and TATA. The farmer feels powerless against the large electricity producers and suppliers and view the DBT proposal as an outright threat to their economic stability.

The 2020 bill also advocates promoting a renewable energy approach, under section 3, para 3A. The bill also proposes a National Renewable Energy Policy for promotion of and generation of electricity from renewable sources. While this policy provision is in line with India’s commitment to 2015 Paris Agreement and promoting renewables, the 2020 amendment it is yet to receive parliamentary approval. This is due to the farmers’ plight and protests, due to which the process of passing the bill may take a back seat. The issue thus needs a faster resolution.

In addition to the provisions that form basis of economic insecurities of the farmers, there are other notable amendments in the 2020 bill. Some of them are: 

• Setting up of National Selection Committee for the appointment of Chairperson and members of the regulatory bodies, instead of the earlier process where a separate a Selection Committee was appointed by each state.
• Strengthening of Appellate Tribunal (APTEL): a proposal to increase the size of the team to at least seven members, in addition to the Chairperson. This will facilitate faster disposal of cases in case the stakeholders including farmers or any party in question has issues.
• Discoms will now be authorized to issue sub-licenses to supply electricity in a specific area. This will help improve the quality of supply. It is expected to provide easier access for private sector companies to enter the area of power distribution.
• Compliance provisions of the 2020 electricity amendment bill have enhanced penalties under Section 142 and 146 of the 2003 act.
• Section 49A (10) and (2) talks about electricity trade with some additions to the 2003 act. The Central Electricity Regulatory Commission (CERC) is to provide detailed regulations on cross border trade of electricity. There is cross border trade already taking place with Bangladesh, Nepal, Bhutan and India. The amendment is in tune with making India a net exporter of electricity.  This provision also allows India to make its transmission grid available for trade between two countries other than India.

While these proposals seem good on paper, there are some underlying issues, in addition to the farmers’ grievances. For instance, excessive centralization is one of the major criticisms faced by this Bill. The Centre is taking over a lot more responsibility in the sector than the state, that too in a politicized area like electricity. According to the Constitution of India, electricity is a subject in List III of the Seventh Schedule, whereby both the central and state governments have the powers to make laws on it. We live in the era of cooperative federalism, where “centre- state coordination” is the buzzword. The centre taking sole responsibility for a politicized subject such as electricity does not fall in good spirit. Also, the bill does not clearly address the issue of electricity subsidy, which has been a contentious issue in the recent past. Lastly, the bill does not make clear-cut provisions for electricity storage. This is necessary if India is to switch to renewables, along with emerging as a net exporter of electricity.

The government and the farmer groups are in the midst of a resolution but are yet to come up with something conclusive. Verbal reassurances are provided by most leaders, but the farmers won’t be satisfied unless the bills are scrapped completely.