Bengaluru: Rich farmers have cornered a disproportionately large chunk of irrigation pump electricity subsidies in Karnataka, suggesting significant misuse of subsidies and adding to the growing financial burden on the state’s coffers, a study by the state government has found.
According to the state finance department’s internal analysis, of the Rs 18,000 crore annual expenditure for free power in 2023, nearly Rs 5,000 crore was used by “affluent farmers and non-agricultural users”, who are not the intended beneficiaries of the power subsidies. The government gives an annual average subsidy of Rs 52,000 per pump set.
“Subsidised electricity for irrigation pumps is a cornerstone of the state’s agricultural policy, aimed at supporting farmers by reducing operational costs,” according to the state government’s analysis.
“However, this subsidy has witnessed a dramatic increase over the years, raising questions about its financial and environmental sustainability, equitable distribution, and potential misuse,” it added.
Data shows that smaller farmers owning less than 5 acres, the primary target for subsidies, number just over 23 lakh and have 34.17 lakh connections.
And medium farmers, who own between 5 and 10 acres, account for nearly 90,000 connections while large farmers with over 10 acres hold over 27,000 connections. These large farmers are typically rich landlords who are not the intended beneficiaries of the subsidies, the analysis shows.
The study cites other data that suggests misuse of subsidies.
“Alarmingly, 5.68 lakh beneficiaries, associated with 9 lakh pump sets, are not listed in the FRUITS portal—a government database of farmer-beneficiaries. This suggests that affluent farmers or non-agricultural users may be misusing the subsidy,” according to the finance department.
FRUITS stands for ‘Farmer Registration and Unified beneficiary Information System’
Moreover, 6.55 lakh Aadhaar numbers linked to 10.97 lakh pump sets are missing from the KUTUMBA database, a comprehensive state registry of citizens.
The finance department also found that the power subsidy bill shot up by a staggering 121 percent from Rs 10,118 crore in 2016 to Rs 22,387 crore in 2023.
“The sharp rise in subsidy costs—more than doubling in seven years—places a significant burden on Karnataka’s finances, limiting the state’s ability to fund other development initiatives,” the study said.
Moreover, while the number of farmers has remained stable, irrigation pump connections surged by 70.85 percent from 20 lakh in 2012 to 34.17 lakh in 2023. This translates to an average addition of 1.2 lakh pumps a year.
According to a senior government official requesting anonymity, there is “no policy” to limit the number of 10 hp pump sets a farmer can own, making it harder to implement or check the growing demand for such machines by those claiming to be involved in agricultural activities.
“So far, in the past 20-30 years, nobody has thought of restricting the subsidies to only one pump set per person or anything like that. Nobody has even thought about it… The culture is that we do not pay for irrigation pump sets,” the official told ThePrint.
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Financial strain
Karnataka’s cash-strapped government conducted the analysis this year in a bid to plug excessive capital outflows and identify new revenue streams to offset the growing financial strain on account of funding its five guarantee schemes.
Subsidy costs have increased sharply in Karnataka while avenues for cash inflows have dried up in the post-GST era, a challenge faced by many states across India.
Although one of India’s most high-performing states, the number of welfare seekers in Karnataka has risen, indicating that the state’s growth isn’t equitable and is not in line with its rising budget or revenue collections.
To make up the shortfall, the Karnataka government has increased taxes on alcohol, fuel and stamp duties while reducing funding for various programmes—effectively shifting the financial burden of welfare programmes or subsidies onto taxpayers.
In a bid to stabilise finances, the state government has engaged Boston Consulting Group (BCG) and has at least one other committee to identify revenue streams to fund developmental projects and plug expenditure leaks.
The Siddaramaiah-led Congress government in Karnataka has followed a common political practice of adopting policies that cater to the growing demand for subsidies.
These subsidies, a part of various welfare schemes, have resulted in a financial crunch, which in turn has starved infrastructure and other promised development projects.
With over 60 percent of the state’s population still directly or indirectly involved in agriculture, political parties have designed policies around the farming community which more often than not, extend more subsidies rather than reduce them, data shows.
The financial strain is compounded by environmental concerns as unchecked electricity usage for groundwater extraction has caused acute water shortages in several districts of drought-prone Karnataka.
Recommended reforms
The finance department has proposed a series of reforms, including a comprehensive audit to weed out ineligible beneficiaries and the introduction of a cap on subsidised benefits extended to the farming community as a whole.
However, the official said that implementation is politically sensitive and any reforms can only be rolled out after the government weighs their political implications.
The farming community constitutes the largest voting group in nearly all Indian states, forcing political parties to design policies to accommodate its demands.
Political parties steer clear of cutting benefits extended to this community as any move perceived as ‘anti-farmer’ has significant political implications.
Programmes or policies perceived—or projected by the opposition—as anti-farmer or anti-poor have often triggered a significant backlash.
For instance, the Siddaramaiah-led government has faced flak for trying to weed out ‘ineligible beneficiaries’ among BPL card holders.
Data from the Department of Food, Civil Supplies & Consumer Affairs, as of 20 September 2024, shows that over 1.25 crore households and 4.34 crore people in Karnataka were identified as beneficiaries of the Antyodaya Anna Yojana (AAY) and the Priority Households (PHH), respectively—both central schemes part of the National Food Security Act (NFSA), ThePrint reported.
But this move was projected as Siddaramaiah being ‘anti-poor’ and depriving economically backward groups of free food grains and other benefits.
“The idea of the government is that we should quantify these benefits and try to establish some kind of limit so that they go to the people who need them and not to all. So far, there is no such decision,” the official said.
(Edited by Sugita Katyal)
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Indian farmers are not an asset for the nation. They are just liabilities. Their pathetic productivity levels coupled with their political clout has ensured that Indian agriculture has remained stuck in the 1970s. Whereas the world has moved forward, our farmers are stuck in the past.
They live off the hard earned money of Indians working in the services and manufacturing sectors.