Farm power policies and groundwater markets

Abstract

With India emerging as the world’s largest groundwater irrigator, marginal farmers and tenants in many parts have come to depend on informal water markets for irrigation. Power subsidies have grown these markets and made them pro-poor, but are also responsible for groundwater depletion, and for financial troubles of electricity distribution companies of India or DISCOMs. Gujarat has successfully reduced subsidies by rationing farm power supply, and West Bengal has done so by charging farmers commercial power tariff on metered consumption. Subsidy reforms have hit poor farmers and tenants hard in both the states. Gujarat has tried to support the poor, with some success, by prioritising them in allocating new tube well connections. We argue that West Bengal too can support its poor by tweaking its farm power pricing formula to turn a sellers’ water market into a buyers’ one.