Impact of Electricity Tariff Policies on the Use of Electricity and Groundwater: Arguments and Facts

Most of the researchers theortically argue that the cheaper electrictiy tariff policy (Flat-Rate) introduced for agricultural purpose makes way for the famers to use both the electricity and groundwater inefficiently as the morginal cost of these inputs under this syslem is near zero. Therefore they advocate that pro-rata tariff system can be used to increase the efficiency in the use of these two inputs. But in real condition, influence of tariff rate on the consumption of these two inputs would he less as it constitiutes a very meagre proportion in the tolal cost of cultivation. Moreover consumption of these two inputs mostly determined by many supply and demand factors other than tariff role alone. It is in this context, this paper aims to find out the relationship between tariff rate and consumption of electricity as well as the factors which determine the consumption of these two inputs by using macro-level data. This study concludes that there seems to be no direct relationship between the tariff rate and the consumption of electricity per pumpset and fact, it is significantly higher where tariff rate is presently higher. Since the factors like development of groundwater, punpset intensity, availability of surface sources of irrigation, hours supply of electricity, cropping pattern etc. mostly determine efficient use of electricity and groundwater, it is difficult to achieve efficiency in the use of these two inputs by manipulating tariff rate. Therefore, the present study suggest that appropriate rationing in electricity supply, improving pumpset efficiency and differential tariff rate con be taken up simultaneoulsy with the introduction of quality extension network to achieve efficiency in the use of electricity and groundwater.