State to save Rs 700 crore annually as new electricity rates come into effect from October 1
Shimla — In a significant policy shift, the Himachal Pradesh government has announced the discontinuation of the one-rupee electricity subsidy previously extended to industrial consumers. The move, effective from October 1, is expected to generate annual savings of approximately Rs 700 crore, which the government plans to reinvest into speeding up developmental projects across the state.
The subsidy cut will affect both industrial and domestic consumers, though domestic users will continue to receive some relief. According to the new rates, domestic consumers using up to 300 units of electricity per month will still benefit from subsidies ranging between Rs 1.83 and Rs 3.53 per unit, depending on their consumption slab. However, consumers exceeding 300 units will no longer receive the Rs 1.03 subsidy per unit and will instead be charged Rs 6.25 per unit, up from the previous Rs 5.22.
Industrial electricity users will also see changes in their bills. Consumers receiving electricity at more than 66 kV capacity will now be charged between Rs 5.66 and Rs 6.06 per unit. This follows the government’s earlier decision to stop the one-rupee subsidy for commercial consumers using more than 20 KVA capacity. Such consumers will now be billed at Rs 6.31 per unit. Small shopkeepers, however, are largely exempt from these changes, as their electricity usage typically falls below the new threshold.
Despite the removal of the subsidy, officials have assured that electricity prices in Himachal Pradesh will remain competitive compared to neighbouring states such as Punjab, Haryana, and Uttarakhand. The state’s Energy Department highlighted that, while industries and larger businesses will feel the impact of the subsidy cut, the changes are part of the government’s strategy to strengthen Himachal’s financial standing.
In a bid to balance the effects of the subsidy removal, the government has introduced significant relief measures for small and medium-sized industries. The electricity duty for small industries has been reduced from 11 percent to just 3 percent, while medium industries will see a cut from 17 percent to 10.5 percent. Large industries, excluding cement plants and stone crushers, will benefit from a reduction in electricity duty from 19 percent to 16.5 percent.
This dual approach aims to alleviate the financial pressure on small and medium enterprises (SMEs) while maintaining fiscal responsibility. The subsidy cuts will, however, impact large businesses, including hotels, malls, and major industrial operations, which will face higher electricity rates.
The decision to halt the one-rupee subsidy was formally communicated in a letter from the state’s Energy Secretary to the State Electricity Regulatory Commission. Officials explained that by saving crores in subsidy payouts, the government could allocate more resources to infrastructure and other critical projects, driving the state’s economic growth.
