CAG Red Flags Delhi's ₹42 Cr Subsidy To Dormant Power Connections

The Comptroller and Auditor General (CAG) has identified several irregularities in Delhi's electricity subsidy programme, including the payment of more than ₹42 crore to dormant electricity connections that recorded no power consumption over extended periods.

The audit also questioned whether the scheme effectively reached the intended beneficiaries, according to a report tabled by Chief Minister Rekha Gupta in the Delhi Assembly on Friday.

The audit report reviewed the implementation of the subsidy scheme between FY20 and FY23, when the Aam Aadmi Party (AAP) was in power, as per news agency PTI.

According to the CAG report, the power subsidy "did not reach the deserving and disadvantaged section of the population" and instead covered nearly the entire domestic consumer base.

The audit found that over 30 lakh consumers using up to 200 units of electricity a month received an average subsidy of around ₹6,000 per connection annually.

By comparison, nearly 16.6 lakh consumers in the 201-400 unit consumption bracket received an average annual subsidy of more than ₹10,000 per connection, around 70% higher than those consuming less electricity, PTI reported.

The report also found that subsidy payments continued for electricity connections that registered zero consumption for several consecutive billing cycles. "A total of ₹42.26 crore was granted as subsidy to such dormant domestic connections during 2019-2023," the report said.

The Delhi government revised the scheme from October 1, 2022, requiring consumers to apply for the subsidy following a Cabinet decision. However, the audit said this change did not significantly reduce the government's subsidy burden, as the number of consumers opting for the benefit remained higher than those who eventually availed it.

What Is Delhi's Power Subsidy Scheme

Introduced in August 2019, the scheme offers free electricity for households consuming up to 200 units a month, while those using 201-400 units receive a 50% subsidy, capped at ₹800 per month.

According to the CAG, expenditure on the scheme rose from ₹2,405.59 crore in FY20 to ₹3,161 crore in FY23.

The audit noted that power subsidy accounted for 66.96%-70.39% of Delhi's total subsidy expenditure during the review period, while subsidies overall made up nearly 10% of the government's revenue expenditure.

It also observed that domestic consumers represented around 84% of the consumer base, consumed roughly 60% of electricity, and received more than 95% of the subsidy disbursed.

What Are CAG's Recommendations

The CAG reiterated recommendations for implementing a Direct Benefit Transfer (DBT) model, noting that both NITI Aayog and the Delhi government's finance department had previously supported the mechanism.

While the power department maintained that DBT was not feasible because of outstanding dues of discoms to power generation companies and Delhi Transco Limited, the audit recommended an "urgent need" for a transparent subsidy framework.

It also advised the department to regularly analyse consumer data and conduct random field inspections to verify electricity connections and prevent misuse.