Punjab government sources said that the state had an estimated 39.8 lakh domestic consumers and those expected to benefit from this new scheme, once the state regulatory commission gives its nod, would be in the region of 7-10 lakh consumers.

Unhappy with this decision of the state, the Centre is expected to ask the Amarinder Singh government to explain this latest move as the “Prime Minister is against free power” policy. Power Ministry sources said that if Punjab is unable to justify the decision which is retrograde to the reforms process, the Ministry would stop the incentive-linked funding given to states under the accelerated power development reform programme and those given for rural electrification.

When The Indian Express reached Chief Minister Capt Amarinder Singh for comment, he said he did not think the decision was a populist move. He said the state would provide all budgetary support to the power sector on account of this decision.

According to the CM, people were not benefiting from the earlier policy and, therefore, “we are being fair to the people and have removed the restriction of 500 watts”. He said many SC consumers in the state, on account of rising affluence, had loads above 500 watts. This decision, he said, was based on the feedback received from certain sections complaining that they felt “left out” under the previous policy.

The subsidy burden on the state exchequer as result of this decision would more than double and is expected to be at least Rs 300 crore. This is over and above the burden that the state already faces on account of free power to agriculture which, according to the Chief Minister, is around Rs 1200 crore—thereby taking the total subsidy burden on account of free power to Rs 1500 crore.

Under its earlier policy, the state allowed 200 units of free power to SC consumers with the caveat that the household should not have a connected load of more than 500 watts (covering basic lighting and some fans). Under the new decision cleared by the state cabinet on May 31, the caveat of 500 watts has been lifted.

Even if a domestic consumer has three air conditioners, the first 200 units of power consumed would be borne by the state government as long as the consumer is an SC, irrespective of economic status.

Put another way, an SC consumer with a 1000 watt AC can run it free of cost for 200 hours or for slightly over eight days continuously without worrying about the bill. State government sources, however, did clarify that the consumer would be subject to the fixed commitment charge for load above 1 kw (1000 watts).

While the Electricity Act doesn’t disallow state governments from subsidizing sections of society as long as it pays for it upfront, states starting from Andhra Pradesh, then Maharashtra and now Punjab have announced free power to sections of society, especially just around election time. The Power Ministry has already held back funds for rural electrification in AP as the state is yet to justify its power subsidy scheme.