Turmeric Man of Himachal Pradesh

The Himachal Pradesh Vidhan Sabha recently passed an amendment to the Himachal Pradesh Electricity (Duty) Act, 2009, by introducing a milk cess of 10 paise per unit and an environment cess ranging from 2 paise to Rs 6 per unit on electricity consumption. The Himachal Pradesh Electricity (Duty) Amendment Bill, 2024 was approved by voice vote in the Assembly, despite strong opposition from the BJP. The bill, presented by Chief Minister Sukhvinder Singh Sukhu, seeks to address the state’s financial challenges while promoting milk production and environmental sustainability.

Key Provisions of the Amendment Bill

The bill proposes the imposition of two types of cess:

1. Milk Cess: This cess of 10 paise per unit will be levied on all consumers, except those who fall under zero billing consumers. The primary objective is to support milk producers, strengthen the rural economy, and boost milk procurement in the state.
2. Environment Cess: The bill introduces an environment cess to promote sustainable energy use and support environmental initiatives aimed at boosting tourism. The cess varies according to electricity consumption:
• 2 paise per unit for small industrial power consumers
• 4 paise for medium industrial power consumers
• 10 paise for large industries and commercial establishments
• Rs 2 per unit for temporary connections and stone crushers
• Rs 6 per unit for electric vehicle charging stations

Both cesses are aimed at generating additional revenue for the state without placing a significant burden on the common man. The government has also retained the power to increase the cess through notification, up to a maximum of 50%.

Government's Rationale for the Cess

Chief Minister Sukhvinder Singh Sukhu defended the bill, stating that these measures are essential to strengthen the rural economy, improve milk production, and ensure a clean environment for tourism. According to the government, the cess will help stabilize the state's financial condition. Himachal Pradesh, despite being rich in natural resources, has been grappling with a financial crunch. Sukhu mentioned that in the past, the state earned Rs 130 crore through the cow cess imposed on liquor bottles, which served as a similar revenue-generating initiative.

Sukhu emphasized that electricity will remain cheaper in Himachal Pradesh compared to neighboring states, including Punjab, Haryana, and Uttarakhand, even after imposing the cess. Additionally, the power surplus state faces the challenge of procuring electricity at Rs 7 per unit during the winter months, making the cess crucial for maintaining the state's fiscal health.

Opposition's Concerns

The Opposition BJP criticized the bill, calling it counter-productive for both the common people and the state's investment climate. Leader of Opposition, Jai Ram Thakur, pointed out that the government has already burdened the public by increasing diesel prices by Rs 7 per litre, withdrawing the free power scheme for consumers using up to 125 units, and increasing tap water charges from Rs 10 to Rs 100 in rural areas. Thakur questioned why investors would come to Himachal when neighboring Uttarakhand offers cheaper electricity and better connectivity.

BJP member Trilok Jamwal highlighted the irony of imposing a heavy environment cess on electric vehicle charging stations while the state government aims to turn Himachal into a green energy hub. According to Jamwal, this policy could deter the adoption of electric vehicles and hinder the state's clean energy goals.

Impact on Different Stakeholders

While the government sees the cess as a necessary step for revenue generation and environmental preservation, the opposition argues that it will discourage industrial investment in the state, especially in light of the already challenging infrastructure. For small businesses and industrial units, the additional costs may be a deterrent, particularly for industries like stone crushers and temporary connection users, who face a higher cess.

On the other hand, for farmers and rural communities, the milk cess could provide a much-needed boost, potentially improving livelihoods and local economies. By channeling funds into milk production, the state aims to create a sustainable source of income for rural households, although the overall success of this initiative will depend on its implementation.

What Does This Mean for the Common People?

The milk and environment cesses introduced by the Himachal Pradesh government reflect a broader strategy to address the state's financial deficits while focusing on sustainability and rural development. However, whether the policy will achieve its intended goals remains to be seen.

From a reader’s perspective, the move can be seen in both positive and negative light. On one hand, the cesses provide necessary funds for important causes like environmental protection and support for farmers. On the other hand, the increased financial burden, especially on industries, could hinder economic growth and dissuade investors from choosing Himachal Pradesh over neighboring states with more favourable policies. One may find themselves divided on whether this bold step will indeed promote long-term sustainable growth or whether it will prove counter-productive as the opposition claims.

What’s your take? Does the potential to support milk producers and boost tourism outweigh the concerns about increased costs for industries and consumers?