COMMENTARY
Managing Groundwater–Energy
Nexus in India
What Will Solar Pumps Achieve?
Meera Sahasranaman, M Dinesh Kumar, Mahendra Singh Verma, Chris J Perry,
Nitin Bassi, M V K Sivamohan
The fresh arguments made by
Shilp Verma and others in support
of the “SpaRC” model, as a solution
for India’s multiple problems of
groundwater depletion, farmer
distress, poor financial working
of the power sector and growing
carbon footprint in agriculture
are misleading, and the analyses
presented to back them are flawed.
Meera Sahasranaman (meera.pradeep@gmail.
com) is an independent consultant.
M Dinesh Kumar (dinesh@irapindia.org) is with
the Institute for Resource Analysis and Policy.
Mahendra Singh Verma (msverma@msn.com) is
an advisor to IRAP on projects and partnerships.
Chris J Perry (chrisjperry@me.com) is an
independent consultant. Nitin Bassi (bassi43@
gmail.com) and M V K Sivamohan
(sivamohanmvk@gmail.com) are with IRAP,
Hyderabad.
22
I
n the rejoinder note on the discussion
by Meera Sahasranaman et al (2018),
Shilp Verma et al (2019) awkwardly
sing the chorus to the arguments made
by Tushar Shah et al (2017) that one way
to reverse the trend of depleting ground-
water and increasing farm power subsidy
(which is draining power utilities) is to
“promote” “Solar Power as a Remunerative
Crop” (SPaRC) among farmers by (i) using
solar irrigation pumps (SIPs) to replace
grid-connected electric tube wells, and
(ii) offering SIP owners a buyback guar-
antee for their surplus solar energy at a
remunerative price. Such a policy would
create an incentive for farmers to conserve
energy and water, curtail grid power
subsidies that burden distribution com-
panies, reduce carbon footprint of irri-
gation and offer farmers a new risk-free
income source (Verma et al 2019: 62).
Unfortunately, the authors fail to present
any new evidence, wilfully closing their
eyes and ears to the facts that run con-
trary to their claim that a heavily subsi-
dised solar photovoltaic (PV) system
march 13, 2021
with a feed-in tariff would be economi-
cally viable.
Viability Question
The note argues,
Solar irrigation pumps, considered unviable,
are being aggressively promoted with high
investment subsidies by governments and
DISCOMs (electricity distribution companies
of India) to reduce farm power subsidy bur-
den. (Verma et al 2019: 64)
This is an incorrect statement. If solar
pumps are unviable, what is the logic be-
hind giving high investment subsidies for
it? Subsidies are desirable, when the tech-
nology is economically viable, that is, it
generates enough benefits to the society,
but is not viable from the point of view of
private benefits and costs. The authors
have not produced any data to show that
the SIPs are economically viable, even when
the sum of direct and indirect economic
benefits is compared against the full cost
of the system. In this case, not only a heavy
capital subsidy is given to the farmers for
the infrastructure (to the tune of 90%) to
bring down the financial costs, but price
incentive (to the tune of `2.5/kilowatt-
hour [kWh]) over and above the inflated
tariff under the power purchase agreement
of `4.26/kWh, is also offered for the energy
produced by them to jack up the revenue.
Marginal Cost–Benefit Concept
Verma et al (2019: 65) state in the foot note:
The confusion stems partly from a misin-
terpretation of marginal cost and marginal
vol lVi no 11 EPW Economic & Political Weekly

returns in irrigation. The first irrigation in
any crop will yield high marginal returns
on energy use, let us say `100 per kWh.
This is because the first irrigation generally
provides the highest increment to crop yield,
compared to a completely rain-fed crop. How-
ever, as the farmer keeps irrigating, the mar-
ginal returns from each additional irrigation
will decline. By the third irrigation, the mar-
ginal returns might be down to `20/kWh
and for the fifth irrigation, the marginal
returns might be `7/kWh. When the farmer
gets free or subsidised power at `1/kWh, it
makes economic sense for them to irrigate a
sixth time because marginal cost is `1/kWh
while marginal return is `7/kWh. In fact,
they will continue irrigating till marginal
returns fall below the marginal cost of
pumping. However, this behaviour is neither
efficient nor desirable as the marginal cost of
electricity for the society is much higher than
the private marginal cost. Faced with similar
marginal returns, a grid-connected “SPaRC
farmer” will stop irrigating after the fourth
irrigation because they can earn `7/kWh
simply by evacuating it as surplus power. In
both cases, the average returns from irriga-
tion will be the same (close to `50/kWh) but
pumping behaviour will be very different,
leading to efficient outcomes.
This is incorrect application of the
concepts of marginal costs and marginal
returns. The price being offered by the
utility for the electricity is the opportunity
cost of using solar power for irrigation.
This is `7/kWh. The marginal return is
that of the marginal net income from
crop production. Yes, as pointed out by
Verma et al (2019), the marginal return
from irrigation will keep declining as
the irrigation dosage increases (Kumar
2005). But the fact remains that adequate
number of irrigations have to be given to
get the optimum yield, which can range
from five–six irrigations (for wheat) to
30–40 irrigations (for banana). It is totally
false to assume that with one irrigation,
the marginal return will be highest! In
fact, there will be no yield or return for
most irrigated winter and summer crops
in semi-arid and arid regions with one
irrigation and therefore the marginal
return is zero and not `100/kWh. By the
time water is pumped out for 30 irriga-
tions (for banana) of 10–12 for paddy,
the groundwater is already mined. So,
making the distinction between efficiency
and sustainability is very important, and
is ignored by the authors. The moot point
is sustainability of groundwater use.
Further, after efficiently using the irrigation
Economic & Political Weekly EPW march 13, 2021
COMMENTARY
water in the farm, the farmer has the electric pump by the most conservative
option of selling the water pumped out estimate is around 50%.1 This means,
using the surplus electricity to his neigh- 1 kWp of solar power is equivalent to
bour at a price of around `40/kWh so 0.33 kW of electric pump in the most op-
long as the demand persists. The mar- timistic scenario of having an efficient
ginal cost and return concept do not solar PV system. Hence, even by the most
work here. It is the average return against conservative estimate of solar PV system
a marginal opportunity cost. cost used by the authors (that is, `50/
watt-peak), the total cost of replacing
Cost of Replacing Electric Pumps the 15 million electric pumps works out
The authors provide poor estimates of to be `10.12 lakh crore (15*10^6 ×
the cost of replacing 15 million electric 50,000 × 13.5 = 10.12 × 10^5 crore, that
pumps in India. It says: is, 10.12 lakh crore). The annual agricul-
Even if capital costs do not decline any fur- tural power subsidy in India is taken as
ther (which is highly unlikely), solarising `50,000 crore for calculations, while the
India’s 15 million electric pumps will cost figure stood at `45,561 crore in 2011–12
the exchequer only `2.92 lakh crore (as- (Planning Commission 2011). Hence, in
suming an average size of 6.5 HP); not the
order to recover the capital cost of the
`9 lakh crore estimated by Sahasranaman et
system through the saving in agricultur-
al (2018). Thus, by spending the equivalent
of 3.65 years of farm power subsidy, the an- al power subsidy (claimed by Verma and
others in their discussion note), the
nual dead weight of farm subsidies, and the
perverse incentives that they create, can be farmer would require to keep the system
eliminated. (Verma et al 2019: 63) running for nearly 100 years (with a dis-
To replace 6.5 HP or 4.5 kilowatt (kW) count rate of 5%) and not 3.65 years as
(6.5*0.746) of average capacity of an claimed by Verma et al (2019). But the
electric pump with a solar PV system of life of the system even under the most
equal power, we need a solar PV system optimistic scenario is only 25 years.
of around 13.5 kilowatts peak (kWp) and
not 4.5 kWp of power. This is because of The Cost–Benefit Claims
the huge difference in energy conversion Verma et al (2019) contest that the cost
efficiency. Solar cell energy conversion figures considered by Sahasranaman et al
efficiencies for commercially available (2018) for estimating the capital cost
solar cells are around 14%–19%, whereas subsidy are very high as it included the
the energy conversion efficiency of an old cost of the microgrid (around `20 lakh)
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vol lVi no 11 23
COMMENTARY
and that once the same model is used for
replacing the existing electric wells, the
cost would go down. In the light of this,
their argument is that the subsidy required
is only 40% for replicating this model.
But they missed the fact that Sahasra-
naman et al (2018) had essentially com-
mented on the economic viability of the
Dundi model (where diesel pumps were
replaced by solar PV systems with a mi-
crogrid) and therefore had analysed the
viability of that model based on the fig-
ures (`50.4 lakh) provided by the au-
thors in the original article by Shah et al
(2017). The extent of subsidy does not
matter. What matters is whether the
model is economically viable or not. It
should also be noted that the annualised
cost considered by Sahasranaman et al
(2018) was only `4.4 lakh against `3.59
lakh of the annual return, based on an
assumed lifespan of 25 years and not “12
years” proposed in the rebuttal. Had it
considered a 12-year life, the cost would
be `6.6 lakh as mentioned in the same
rebuttal (Sahasranaman et al 2018). We
would like to point out that we were lib-
eral in evaluating the benefits of solar,
as the whole intervention was to show
that even with inflated benefits, the sys-
tem is socio-economically unviable. Be-
cause of this reason, the entire energy
production by Dundi coop was consid-
ered for estimating the direct benefit of
solar PV,2 while the portion of electricity
produced and used by the farmer mem-
bers was considered for estimating the
subsidy cost saving as the unique advan-
tage of the model.
Now, the nationwide replication of
Dundi experiment results propounded
by the Shah et al (2017) and Verma et al
(2019) will have to cover farmers already
having electric power connection, and
for this the cost of the grid is to be
excluded from benefit cost calculations.
In that case, if we have to go by the new
cost break-up offered by Verma et al
(2019: 62), the annualised cost of solar
PV system works out to be `33 lakh for a
25-year life and `4.95 lakh for a 12-year
life. But the benefit part of the equation
changes altogether. The energy require-
ment of farmers in an electric pump irri-
gated area in most parts of India is likely
to be much higher than that of Dundi,
24
and as a result, the surplus power which performance report of state power utilities
(PFC 2015) reveals that an average elec-
farmers can sell would reduce to almost
tric pump in central Gujarat consumes 830
nil, if we choose a solar PV system of the kWh/HP/year. Against this, the consump-
same capacity. In that case, the only eco- tion of member farmers of the Dhundi solar
nomic benefit of having solar PV system cooperative is only 446 kWh/HP/year. This
shows that they are consuming about 45%
connected to the grid is the saving in gov- less energy than they would have if they
ernment subsidy for power, plus the pos- had equivalent capacity electric pumps
itive externality associated with produc- with subsidised farm power. Given that the
tion of clean energy (that is, 0.47 × groundwater situation and water levels are
comparable in central Gujarat and that their
60,000 = 28,200). Then the net income
crop yields are comparable to those of elec-
works out to be `2,40,000 + `28,200 = tric pump owners, this is the best proxy in-
`2,68,200. If we consider a lifespan of 12 dicator for efficient pumping behaviour and
years, the cost goes up to `4.95 lakh groundwater use in agriculture.
against the same benefit. Here again, In our view, comparing the average en-
the cost far exceeds the benefit. ergy consumption for irrigation in a re-
Another way of looking at the benefit gion with that of a few farmers in a vil-
and cost is to consider the cost of clean lage from that region does not make
energy production (or the replacement much sense. First of all, the groundwater
cost of fossil fuel-based electric power), in the village is heavily recharged by ca-
against its benefit, the latter being the nals (Shah et al 2017) and the return
full economic cost of producing fossil flows from irrigated fields. Second, how
fuel-based power. The cost of clean much electricity the farmers use for
energy production works out to be `5.5 pumping groundwater depends more on
per kWh (3,30,000/60,000=5.5), which the operational holding, keeping other
is nothing but the annualised cost of conditions the same. In this case, all the
solar PV system divided by the total en- farmer members of the solar cooperative
ergy produced per annum in kWh. The are marginal holders, with less than one
benefit is `4.97 per kWh, for an assumed acre of holding. The average landholding
life of 25 years. For an assumed life of 12 in Kheda district (where the village falls)
years, the cost is `8.25 per kWh, against is 1.14 ha, that is, 2.70 acre (Agricultural
the same benefit. Census, Government of Gujarat 2011).
So, it is incorrect to compare the energy
Efficient Pumping Behaviour? use by these marginal holders with the
Verma et al (2019: 63) states: average energy use by farmers in central
A simple analysis of data from the Fifth Gujarat, simply because the ground-
Minor Irrigation Census (GoI 2017) and water condition and landholding sizes are
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march 13, 2021 vol lVi no 11 EPW Economic & Political Weekly

uncomparable. A proper study based on
primary survey involving comparative
analysis of water use efficiency in crop
production of the solar farmers and the
neighbouring farmers (without solar)
should be undertaken by the International
Water Management Institute (IWMI)
before making any such claim.
The ‘Political Economy’ Argument
Verma et al (2019) argue that their model
of solar PV system with a feed-in tariff is
the second-best solution. They agree that
the metering of farm power with pro
rata pricing is the ideal solution. But
their contention is that the second one is
politically unviable. But there is no anal-
ysis to back these claims. The only argu-
ment is that many state governments had
fallen from Andhra Pradesh to Madhya
Pradesh (Verma et al 2019: 64). Unfortu-
nately, this argument had been paraded
by one of the co-authors of the rejoinder
for nearly one and a half decades (Shah
et al 2004; Shah et al 2017). Yet, there is
not an iota of evidence to this effect, in
the form of studies on this topic. Gov-
ernments fall due to several reasons.
Farm distress can be one of the reasons.
But even then, there is no evidence to
suggest that metering would cause farm
distress. If that is the case, how come
West Bengal (WB) had 100% metering of
farm power supply for almost 13 years
now? The utility in WB charges `4 per
kWh. In Gujarat, for several years, farm
power connections are being metered
and the number of metered connections
has increased substantially to two-thirds
of the tube well connections. There are a
few other states also that do agricultural
metering.
In fact, empirical evidence suggests that
once confronted with positive marginal
cost of pumping groundwater (in the
case of diesel well owners, and electric
well owners using metered connections)
or using groundwater (water buyers),
farmers use all crop inputs efficiently
and modify their farming systems (with
greater allocation of water for water-
efficient crops) to secure higher net
income (`/ha) along with higher water
use efficiency in physical (kg/m3) and
economic terms (`/m3). The average net
income of farmers who incurred higher
Economic & Political Weekly EPW march 13, 2021
cost of using groundwater (water buyers
in diesel well commands) was comparable
with that of their water-selling counter-
parts (Kumar et al 2010).
When an argument like this is made
against an otherwise sound economic
proposition, the onus lies on the authors
to provide robust evidence. But they have
miserably failed in that. The authors are
very fond of promoting an idea, which
would not do any good to either the
groundwater economy or the state ex-
chequer, just because, it will not attract
the farmers’ ire. They say:
Rather than simply wishing for pro rata
tariffs, if Sahasranaman et al (2018) can
offer a way for a democratically elected gov-
ernment to implement it without attracting
the farmers’ ire, it would be a great service
to the nation.
We wonder whether the authors consider
the governments in WB and Gujarat as
not democratically elected!
Conclusions
Finally, there is no Industrial Research
Assistance Programme (IRAP) proposal
on solar power, unlike what is claimed
by Verma et al (2019) in the discussion
note. The authors state:
Table 2 explores three broad alternative
policy trajectories: (i) The “IRAP proposal”
to stop subsidising SIPs, as argued in Sahas-
ranaman et al (2018); (ii) the current model
of SIP promotion being implemented by gov-
ernment agencies; and (iii) IWMI’s “SPaRC”
model of promoting grid-connected SIPs
with low capital subsidy and buy-back ar-
rangements through FiT and EBI.
Contrary to what the authors say, the
note by Sahasranaman et al is simply a
rejection, backed by evidence, of the un-
tenable and unsubstantiated proposal
presented by them in the name of action
research.
For a project in alternative energy
production to be evaluated, a minimum
time lapse of three years from the start
of production is required. Evaluation of
Dhundi solar irrigation coop was done
when it was just 18 months in operation.
IWMI is mentioned as the subsidy pro-
vider. The authors of the original article
(Shah et al 2017) and the discussion note
(Verma et al 2019), who are reported to be
working for IWMI, have invested person-
ally and professionally in Dhundi solar
vol lVi no 11
COMMENTARY
irrigation pilot from conceptualisation
to micromanagement. If it is so, should
not they get a third party to evaluate the
project? Even commercial and corporate
organisations use professional services
of auditors, internal and statutory. The
techno-economic analysis of Dhundi so-
lar project presented in the original arti-
cle and the discussion note is not based
on any norms prevalent in the solar
power sector.
Notes
1 The typical energy conversion efficiency of an
electric motor that converts electricity into
mec hanical energy is 65%, whereas that of
a solar cell that converts solar energy into
electricity is 15%. For details of energy conver-
sion efficiency of different energy production
systems, https://www.ems.psu.edu/~radovic/
Chapter4.pdf.
2 Obviously, the benefits of energy production
through diesel pump prior to solar PV system
adoption was not factored in the B–C calcula-
tions as a cost.
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