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Govt to offer up to 75 Percent funding to boost rural Electricity supply

The National Democratic Alliance (NDA) government plans to fund up to 75 Percent  of the investment required to supply electricity through separate feeders for agricultural and rural domestic consumption, aimed at providing round-the-clock power to village households.

The rationale for providing this generous grant portion for the Deendayal Upadhyaya Gram Jyoti Yojana for feeder separation, announced in the Union budget, is to get the states on board for timely execution of the plan.

Separating electricity feeders is aimed at ensuring that while farmers get the desired amount of electricity, the quality of power and its availability for households improves. It will also ensure that users are billed and technical and commercial losses because of theft are reduced.

The scheme, based on an initiative called Jyotigram Yojana in Prime Minister Narendra Modi’s home state of Gujarat, would work like this: While 30 Percent of the investment requirement will be met through loans from state-owned Rural Electrification Corp. Ltd (REC)— the nodal agency for the ambitious scheme—60 Percent  would be a grant from the Union government administered by REC. The balance 10 Percent  will be funded through equity from the state government or its utilities. Also, once the project is completed, half of the loan given by REC will be converted into a grant, taking the total grant component to 75 Percent.

“The note for the expenditure finance committee (EFC) will be floated shortly,” said a government official requesting anonymity. The project named after the late Deendayal Upadhyaya, a leader of the erstwhile Bharatiya Jana Sangh, the forerunner of the Bharatiya Janata Party, may require an investment of INR 53,000 crore. In addition, the integrated power development initiative which involves strengthening sub-transmission and distribution systems may require around INR 40,000 crore. REC will earn a management fee of 1 Percent for administering the scheme.

For special category states, the BJP-led central government will provide 80 Percent as grant and 10 Percent as loan, while the balance 10 Percent will be funded through equity from the state government. Once the project is completed, half of the loan given by REC will be converted into grant, taking the total grant component to 85 Percent.

Source-On Request