Finance Minister Nirmala Sitharaman while announcing the last leg of measures as part of the Atmanirbhar Bharat package mentioned that the Centre has decided to give in to States’ demand for easing the borrowing limit by increasing it from 3% to 5%. However the Centre has made it conditional by asking State governments to discontinue the scheme of free electricity for farmers and instead adopt direct benefit transfer (DBT).
The States have been given time till March 2021 to implement the DMT with at least a district coming under the DBT scheme before December 31 of this year, the Department of Expenditure of Ministry of Finance said in a communication to the State governments.
Tamil Nadu is one of the states where farmers are given free electricity. Its genesis can be traced to the AIADMK government of Dr. MGR in 1984. Back then, it covered only small and marginal farmers. Its ambit was increased to include large farmers too by DMK government in 1990. The state had tried to change the policy twice but went vain. As of today, a total of 21.4 lakh farmers enjoy free power.
The borrowing limit will be extended to the States if they implement reforms in 3 out of 4 areas – power sector reforms, One Nation One Ration Card, Ease of Doing Business, and Reforms in urban local bodies/utilities. Each of the four areas carries weight of 0.25%.