ABSTRACT
The impact of the free electricity policy on agriculture in the state of Andhra Pradesh (AP), India, is the main focus of this work. It is assumed that this policy has a very high political currency and there is, therefore, a difficultly in recalling it in the short-term. In this context, plausible reforms to this policy are explored with an objective to weed out the inefficiencies in this subsidy regime in the context of groundwater extraction and utilization. These reforms are aimed at reducing the ambit of beneficiaries of this subsidy based on their affordability and increasing the water productivity of agriculture in the state. Some examples exclude large farmers from this policy, offering free electricity conditional upon adopting the System of Rice Intensification (SRI) or adopting micro-irrigation or shifting cropping patterns. These alternate policies are evaluated based on the impact on groundwater extraction, fiscal costs, equity, political feasibility, issues in implementation etc. Finally, it is suggested that the government offers free electricity conditional upon adopting water-efficient cropping practices such as the SRI as a short-term step for increasing the effectiveness of this policy and mitigating its adverse impact on groundwater extraction.
