More reservations

If the Central government's proposals on reservations in educational institutions and private sector jobs are not bad enough, the Punjab government has reached a new high (or low, depending upon how you see it) by offering other sops along caste lines. It has decided that all people belonging to Scheduled Castes in the state, irrespective of their income, will be given the first 200 units of power they use free. And in order to be "fair", the government has decided that this largesse will be available to even those who have a sanctioned electricity load of over 500 watts, that is to those people who cannot be considered poor.

Since it is estimated that the state has 7-10 lakh such households, the theoretical payout could be Rs 300-400 crore per year. And since there is no way to monitor whether consumers use fake caste certificates to get free power, the actual outflow could be much higher. This is not a far-fetched scenario. If you take the power that agriculturists actually use and compare it with the amount supposed to be given to them free, in any state, there is a big difference. Indeed, state electricity boards used to show very a large supply to farmers and use this to hide the problem of power theft. Given that Punjab already has to spend Rs 1,200 crore or more each year on supplying power below cost to farmers, the additional outflow will be a daunting figure. What could make things even worse for the government in Punjab is that the ministry of power is considering the possibility of stopping the assistance the state gets from it by way of funding for the accelerated power development reform programme, as what the state is doing is clearly populist. Some years ago, when the Haryana government proposed something similar, the World Bank had stopped disbursing a loan for electricity reforms, even though the first tranche had already been disbursed.

Apart from the issue of what this does for Punjab's fiscal situation, the possibilities it throws up are frightening. Other states going to the polls (Punjab will go to the polls early next year) will be tempted to offer similar sops, and political leaders who have strong caste affiliations will certainly wish to follow suit. There is already a proposal that, apart from the quotas in educational institutions, there should be special fees for students from the deprived castes. In other words, the caste virus has been let loose, and where it will strike next is anyone's guess. Since the Punjab government has made its announcement on free power despite Prime Minister Manmohan Singh's appeal many months ago, asking political parties to not announce free power schemes, it is obvious this requires intervention at a higher level. That means Sonia Gandhi, but so far the party high command has shown no inclination to stop state party units from promising free electricity. It is another matter that fiscal constraints usually force governments to backtrack on their promises, but the vote-getting game is increasingly being defined as one involving competitive populism.