Punjab Chief Minister Charanjit Singh Channi on Monday said the power rates for domestic consumers will be slashed by Rs 3.

"We are reducing power tariff by Rs 3 per unit for domestic consumers," said Channi.

It is a "big Diwali gift" for people, he said, adding that the decision will come into effect immediately.

Channi claimed that the move will benefit 95 per cent of residents in Punjab. He said according to a survey conducted by his government, people wanted quality and cheap power.

"Punjab Cabinet approved PSPCL's proposal to terminate GVK Goindwal Sahib PPA, who was providing electricity at Rs 6-7 per unit. Now, Punjab announced its own 500 MW tender. The rate of electricity will be Rs 2.38 per unit," Channi said.

"Punjab Cabinet has decided to slash power tariff by Rs 3 across slabs. Rs 1.19 will be the new rate for small consumers," he added.

How will the new rates lower the burden on consumers?

Till 100 units, the consumers will be charged Rs 1.19 per unit, which was Rs 4.19 per unit earlier.

For 100 to 300 units, the consumers will be charged Rs 4 per unit, which was Rs 7 per unit earlier.

For more than 300 units, the consumers will be charged Rs 5.76 per unit, which was Rs 8.76 per unit earlier.

The move comes just months ahead of the Assembly polls and will reportedly put a burden of Rs 3,316 crore per year on the exchequer.

Moreover, the Punjab government also announced an 11 per cent hike in dearness allowance (DA) for state government employees. Rs 440 crore will be allotted for this, the Chief Minister said.