The key objective of this Study is to explore practical, politically feasible, scalable and sustainable approaches to address the challenge of adverse water-energy-agriculture nexus in Rajasthan. A bold and contextually appropriate policy framework of rapid expansion of rural electrification for irrigation, power and water subsidies, focus on cereal crops, market support through pricing and procurement, and promoting inorganic fertilizers designed to address the acute food crisis of a growing population in the 1970s gradually started falling out of step with the changing ground realities. Food shortages have disappeared, and rural poverty has gone down but it has come at a high cost to the energy and water economy and finances of the state. Advancements in solar and communication technologies have opened new possibilities to take a fresh look at the nexus and realign the incentives and interests of the farmers, power utilities, the government and other stakeholders to create win-win opportunities. This Study presents alternatives that have the potential to achieve the trifecta of increased irrigation energy efficiency, water conservation and doubling farmer income. Rajasthan’s agriculture growth has come at a high cost to the water and electricity sectors, but poor quality of power supply inflicts substantial costs on the farm sector.
Agriculture consumes more than 85% of water, 42% of electricity, and contributes about 30% of Gross State Domestic Product. Of late, cropping intensity has increased from 115% in 2005 to 140% in 2015. Surface irrigation in Rajasthan is limited, however, because the bulk of the cropped area is irrigated using groundwater, which has risen to almost 70% the total irrigated area. In fact, two-thirds of the additional area brought under irrigation was due to the expansion of groundwater irrigation, contributing to the overexploitation of groundwater in large parts of the state. Rajasthan has more than 10% of cattle population of India’s cattle population and is the second largest producer of milk in the country. The continuous increase in the state’s human and livestock population is adding pressure to already limited water resources. Though Rajasthan ranks fourth in India’s food and grain production, its agricultural growth has come at a high cost to the water and electricity sectors. While farmers are ostensibly the beneficiaries of subsidized electricity, the poor quality of the power supply imposes substantial economic costs on the farm-sector and has given rise to a complex politicaleconomy which perpetuates this unsustainable situation.
Through grid-connected solar irrigation, Rajasthan can achieve the triple objective of saving water, doubling the farmer income, and making the power sector financially viable, simultaneously and urgently.
• Rajasthan has done some impressive work to increase water security of the state which is one of the most water-stressed states in India. However, depleting groundwater continues to push the water-energy-agriculture nexus into a downward spiral.
• Unless, demand-side measures and incentives to improve water productivity and conservation are put in place supply-side augmentation would remain inadequate.
• In the absence of major transformational disruptions in agriculture sector, electricity sector remains the most effective intervention to shift Rajasthan to a virtuous W-E-A nexus. Price increase for power supply to agriculture to moderate the demand for electricity, and consequently groundwater, is a non-starter in the current political economy, low rural incomes, and critical dependence of agriculture economy on water and electricity.
• The current policy of free/concessional power supply to agriculture is fiscally and environmentally unsustainable. However, falling prices of solar panels, and some successful experiences of grid connected solar energy, have opened-up huge opportunities for addressing the challenge of fiscal impact, unsustainable consumption of energy and water in agriculture, and agro-dependence of rural household income.
• Business Model 2 can add climate-resilient, acyclical, non-farm income to rural livelihood. In addition, it can help create local jobs through the supply chain of solar irrigation pumps.
• Economic analysis shows that a reasonable feed- in-tariff would influence farmers’ decision in favor of selling electricity as against groundwater extraction. However, farmers’ behavioral response to financial incentives for shifting to grid-connected solar irrigation is very difficult to predict due to complex and dynamic interaction between feed-in-tariff, value of water in agriculture, hydro-geology of the area, and seasonal and locally limited water market.
• Two major constraints in speed, scale, and sustainability in implementing KUSUM-C would be: (a) the inability of the State Government to finance the capital subsidy of 30% in the present context of limited headroom under FRBM Act, and (b) Government of India’s requirement of sourcing solar panels and the other equipment from indigenous suppliers.
However, the potential of KUSUM-C scheme can be unlocked only through solarizing the feeders, mitigating the payment risk of the DisCom as buyers of surplus solar energy, and creating Farmer Enterprises as aggregators of power and for self-governance of the feeders.
© World Bank.