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Abstract
The growing dependence of India’s farm sector on groundwater threatens water resources sustainability
and power sector viability. Sustaining India’s rising prosperity rests on managing groundwater. This study
shows that raising power tariffs in the farm sector to achieve efficiency and sustainability of groundwater
use is both socially and economically viable. The farmers, who are confronted with positive marginal cost
of electricity and groundwater, obtain higher water productivity in their farming operations (Rs./m3 of
water), use less amount of groundwater per unit area of farm (m3/ha), yet secure higher net return per unit
of land (Rs./ha of land).This paper shows that establishing an energy quota for farms based on
groundwater sustainability considerations, and metering and charging for power on pro rata basis using
pre-paid meters are the best options to manage groundwater and the energy economy. The social benefit of
reduced carbon emission, achievable through efficient electricity pricing, was estimated to be Rs. 709
crore per annum.