The solar power pumps scheme announced in the budget to improve farmer income and reduce dependence on diesel pumps will involve an expenditure of about Rs1.4 trillion, power minister Raj Kumar Singh said on Friday.

A central financial assistance of Rs48,000 crore will be given for the scheme named Kisan Urja Suraksha evam Utthan Mahabhiyan (KUSUM). The balance will be raised by the states, through loans and farmers themselves to generate 28,250 megawatts.

Surplus electricity generated by farmers will be bought by state electricity distribution companies (discoms) and will help boost the country’s emerging green economy.

To make the shift to solar power pumps attractive, said Singh, the capacity of the solar panels will be double that of the present pumps, which would help farmers sell at least 50% of the electricity generated.

The scheme will start with 1.75 million off-grid agricultural solar pumps.

“Many farmers are installing solar water pumps to irrigate their fields... Government of India will take necessary measures and encourage state governments to put in place a mechanism that their surplus solar power is purchased by the distribution companies or licensees at reasonably remunerative rates," finance minister Arun Jaitley said in his budget speech on Thursday.

While 30% of the subsidy will be provided by the Union government, an equal amount will come from the states. Another 30% will be met through loans while 10% of the cost will be borne by the farmer.

It is estimated that of the 30 million agricultural pumps in India, a third are fuelled by diesel. The scheme will be put up for the cabinet’s approval before implementation.

“Ultimately we aim to cover all agricultural pumps," said Singh.

The scheme will also help improve the health of the discoms, he said. Even as electricity supply to the agriculture sector is heavily subsidized in many states, the entire subsidy component is not credited to the discoms and at many a times is credited late, Singh explained. This in turn has led to their weak financial health.

The minister added that the KUSUM scheme will not only help meet the electricity needs of the farmers but will also “empower’ them.

This comes at a time when the International Solar Alliance is working to aggregate the demand for solar-powered agricultural pumps from member-nations and then call for tenders to bring down costs. The government is also betting on the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya scheme) to provide the architecture through which it will seek to reduce import of fossil fuels, boost underutilized power plants and meet its climate change commitments.

The government is also pushing for steps such as direct benefit transfer (DBT) for better targeting of subsidies, and separation of wire and supply operations. Singh has been championing DBT as a game changer for India’s electricity distribution sector which has been reeling under losses.

The KUSUM scheme will help in cultivating unirrigated land and help in grid balancing, added Anand Kumar, secretary in the ministry of new and renewable energy.

The government is also pressing for tariff slab rationalization and limiting cross-subsidies to 20% to usher in efficiency. In addition, to make discoms more responsive, any disruption in electricity supplies post March 2019 will be penalized. Also, the discoms won’t be allowed to recoup more than 15% of their losses through any tariff increase post-March 2019.

To improve efficiency and reduce losses, the Union and the state governments will also be leveraging technology for 100% metering and doing away with any human interface in consumer-facing functions such as metering, billing and collection.

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