Fiscal Tightrope: CAG Highlights ₹1.9 Lakh Crore Power Subsidy Burden on States

Secondly, the report points toward the environmental and efficiency costs of unmetered or flat-rate power. In many states, agricultural electricity is provided at a fixed rate regardless of consumption, leading to the inefficient use of water pumps and the subsequent over-extraction of groundwater. This creates a critical "water-energy-food" nexus challenge that threatens long-term ecological sustainability and resource management. From a policy perspective, the findings emphasize the need for structural reforms. The CAG suggests a shift toward Direct Benefit Transfer (DBT) for electricity, which would ensure that subsidies reach the intended beneficiaries without distorting the operational efficiency of DISCOMs. Furthermore, the segregation of agricultural feeders and the promotion of solar-powered pumps under schemes like PM-KUSUM are identified as vital steps to decouple farmer support from the financial distress of the power sector. UPSC Relevance: This report is a critical case study for questions on farm subsidies, fiscal federalism, and energy infrastructure. It provides quantitative data to support arguments regarding the DISCOM-State-Farmer nexus and the challenges of implementing Direct Benefit Transfer (DBT) in the power sector while balancing social welfare with fiscal prudence.