Let’s not nip Kusum in the bud, let it blossom

Amisha Yadav @CCMS Bureau

PM Kusum scheme was billed to be a game changer for the farmers. But sadly, it has not turned out that way. It’s not that the scheme is half baked but it suffers from some rough edges that needed to be rounded for the scheme to roll on. PM Kusum (Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan) scheme’s guidelines for implementation came in July 2019. But after more than three years, only 36 projects having 47 MW have been commissioned against a national target of 10,000 MW by Ministry of New and Renewable Energy’s (MNRE). The performance of the scheme in rest of the country is listless.

The objective of the scheme was to make the barren and uncultivable land of the farmers productive with solar plants of up to 2 MW capacity. As part of the mechanism, discoms are required to buy the power at Rs 3 .14 per units fixed by the power regulator in the state.

Rajasthan government was the first state in the country to promote this scheme aggressively among farmers. Rajasthan Renewable Energy Corporation (RREC), the state nodal agency, selected 623 farmers or developers for an aggregated capacity 722 MW through expression of interest (EOI) and issued letter of awards.

But sadly, only 36 farmers set up projects having 47 MW. Himachal Pradesh is the only other state in the country to have commissioned projects worth 3 MW. Most of the farmers, who showed interest earlier, have developed cold feet. According to them, the major impediment is bank financing.

For setting up I-MW project, a farmer needs to investment roughly about Rs 4.5 crore. Being farmers, they have limited financial capacity and are dependent on bank loan.

But lenders want farmers to place collaterals which are beyond their means. The lenders are averse to accept the projects as mortgage against the loans or the assured earnings from discoms as collaterals.

High interest rates and unfavorable debt-equity are other handicaps. MSMEs are given interest subsidies but for Kusum projects, such comfort is not available.

RBI in its circular on September 4, 2020 has included farmers’ projects in the list of priority sector lending, but it has not waived off requirement of collateral for Kusum projects. Without any assured business in- come, MSMEs are extended loans with interest subsidies under various schemes but Kusum projects having power purchase agreements at fixed tariff for 25 years are not considered worthy of a loan.

Rajasthan chief minister in a letter on July 26, 2021 to Union Minister of Power has urged that the estimated revenue from the projects should be considered as collateral. So far, the Centre has not issued clear guidelines for collateral-free easy loans by banks and financial institutions to these projects.

In the meantime, the cost of projects has increased about 25% from the initial cost, whereas banks have not revised their benchmark for calculation of loan amount. This would require farmers to put in more margin money. With the present tariff and escalated cost, projects will not be viable.

“If we want to save the scheme that can really benefit lakhs of farmers in the country, the Centre should in tervene through finance department and RBI, which can issue directions to the banks to consider offering collateral-free loans,” told Anil Dhaka, managing director of RRECL to a leading newspaper.

Additionally, he said, “Given the fact that the scheme is intended to help the farming community, they deserve to get interest subsidy under the priority sector schemes. Also, a subsidy of around 30% of the project cost by the Centre would help mitigate the escalated cost of the projects. Benefits available to other MSME industries should also be provided to these projects so that these projects become viable.”

While MNRE had given Rajasthan a target of 722-MW under the scheme, the state government, looking at the impact of the scheme on the farming community, voluntarily in- creased the capacity to 2600 MW. But the scheme is getting nipped in the bud due to the constraints.

There are many other multiple benefits these projects offer. For example, Kusum projects would generate and consume power at sub-station level. That means lower transmission losses.

Secondly, farmers can avail day- time power for agriculture that will help them to lead a normal family and social life.

As for discoms, capital expenditure on system expansion will be lower and cost of power supply will reduce. For the state government, bur- den of tariff subsidy on agriculture connections are expected to come down. Like the literal meaning of Ku- sum or safflower, which has multiple health benefits, the scheme can light up the lives of farmers. Let it blossom, let it not die.

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