Subsidy on tube wells

This seems to be an open season for political manoeuvring, without any regard to fiscal imperatives of the country. At a time when very stringent steps are needed to minimise the burden on the budget, the government is busy in dishing out favours and putting more pressure on the pubic exchequer.
In a meeting held with the delegation of the Zamindar Action Committee of Balochistan on 2nd November, 2012, where the provincial Chief Minister was also present to plead the case, Prime Minister Raja Pervez Ashraf readily agreed to provide subsidy on electricity bills of tube wells being used by farmers in Balochistan. The facility would be applicable to 15,660 registered tube wells and charges would be shared by their owners and the provincial and federal governments. While owners would pay a fixed amount of Rs 6,000 per month, 60 percent of the balance would be provided by the provincial government and the rest by the federal government. The Prime Minister directed the Ministry of Finance to issue a notification to the effect after completion of necessary formalities. According to him, Balochistan is one of the top most priorities of his government and the farmers in the province have to bore as deep as 1,000 feet for tube wells to get water, which is a very high cost affair for the farmers. Farmers have also been asked to replace the existing tube wells with those run on solar energy so that the issue could be resolved on a permanent basis. However, while offering the subsidy, the Prime Minister emphasised the need for identifying illegal electricity connections of tube wells so that charges could be recovered from their owners.
Such generous behaviour of the political party in power at the cost of government exchequer at this particular time is understandable but cannot be condoned. It is true that most of the foreign governments indulge in profligacy and try to please most of the sections of society in an election year but they could afford to do that mainly because of reasonable degree of stability in the fundamentals of their economies and their strength to withstand the likely negative impact of such popular measures. Also, since the opposition parties and electorate in general could easily smell the purpose behind such trickery, it could be counterproductive, especially in developed countries with high literacy rates. In Pakistan, however, the situation is quite the reverse. Since the people in general don't know the consequences of a loose fiscal policy, government in power could relax its tax mobilisation efforts, increase expenditures by offering all sorts of goodies to win votes and finance the widening fiscal deficit through excessive borrowings from banks. Unfortunately, however, the budgetary position of the country is already so precarious that resort to such a political expediency could be very hazardous and cost the country a great deal in terms of all the economic indicators. The provision of subsidy on electricity bills in Balochistan was also not justified for other reasons. The financial position of energy sector is already so fragile that it cannot bear the burden of additional subsidies to the consumers. We are concerned about this because it is often difficult for various enterprises to get the promised subsidies from the government and as a result the position of such entities worsens further. Also, it is easy to see that the facility of subsidy could be misused by consuming the electricity provided to the tube wells for other purposes, only better off landlords owning tube wells would be benefited and farmers in other provinces will also clamour for such a heavily subsidised facility. So far as Prime Minister's remarks about solar panels are concerned, he is absolutely right in stating the principle but his statement is totally at odds with the subsidy policy of the government. No farmer would like to experiment with an entirely new system and install expensive solar panels if electricity is provided to him at highly subsidised rates. In our view, it is time for the political leadership to rise to the occasion and desist from the kind of politicking which could prove harmful for the economy in the long run. It also needs to be remembered that a facility once given is hard to withdraw in the subsequent period and would continue to be an encumbrance on the budget. If at all, a province wants to provide such a subsidy under some exceptional circumstances, it should find the necessary resources from its own budget without involving the federal government. Also, it is the duty of provincial governments to help the electricity distribution companies to register all the tube wells in their provinces and recover the amount due from them. This could enable these companies to provide some relief to the owners of tube wells who are paying their bills honestly and regularly.