States to get 2 years for DBT, a/cs with discoms to be used: Power Minister

New Delhi: In a sharp deviation from the practised model of cash transfers, the government proposes to initiate direct benefit transfer (DBT) in the power sector by making payment of subsidy into the accounts of consumers maintained by Discoms and not directly into their bank accounts.

The amendments to the Electricity Act, 2003, (Electricity Amendment Bill, 2020) which is in last leg of finalisation and is with the Law Ministry for vetting before being introduced in Parliament, has remodelled DBT structure with states being asked to subsidise tariff for certain identified consumers by transferring the subsidy amount in advance into the electricity accounts of consumers maintained by discoms, Minister of State for Power and New and Renewal Energy RK Singh said.

He said that the said provision has also been made in the new tariff policy which is also with the the Cabinet for final approval.

The minister said that states have been brought on board over the proposed reform initiative and to give time for them to settle with the new system of subsidy, the states would be permitted to delay its implementation by one year, which can be extended for further another year depending on the preparedness of the states.

The new DBT structure for power will change the way the cash transfer schemes work in other sectors. Instead of getting subsidy amount into their accounts while paying electricity tariff at regulators determined rates based on cost of supply, section of households, other subsidised consumers and those identified by state for relief will continue to pay lower tariff as is the case now, while the gap between average cost of supply (ACS) and the actual tariff, will be paid by the state governments into the consumers accounts with discoms. As this payment is proposed to be made in advance, the discoms books could remain in green.

Singh said state governments were apprehensive about launching the DBT scheme as most states don't give subsidy upfront or pay the full subsidy and release balance amounts later. This is not permissible under law that provided upfront payment of subsidy.

"Nonetheless, we recognised this fact that states may not be able to give subsidy uofront everytime and it may get delayed. So, We have provided in the new tariff policy that even if the subsidy gets delayed the consumers may not get affected as electricity will not be disconnected and he/she will continue to pay tariff minus the subsidy payment that had to come from states," Singh said.