Economic analysis of free & subsidized power supply versus solar PV cell subsidy towards sustainable agriculture in India - An external cost approach and policy implications

India's agricultural sector receives extensive support through free or subsidized electricity for irrigation, creating long-term fiscal stress for state governments and contributing to emissions from coal-based power generation. This study presents a comparative economic and environmental assessment of subsidized electricity versus a transition to solar photovoltaic (PV) systems. Using Levelized Cost of Electricity (LCOE) modeling, the study integrates external environmental and health costs through the ExternE framework, localized for Indian conditions. A state-level cost–benefit analysis quantifies the potential savings from reduced subsidies and avoided coal generation, against the capital investment needed for PV deployment. Monte Carlo simulations using the Reserve Bank of India's 4 % ± 2 % inflation target range model long-term variability in electricity costs, enabling more realistic and risk-aware projections. Results show that solar PV becomes more economical than coal when externalities are considered, with LCOE estimates for coal rising to ₹20.49–22.41/kWh by 2045 compared to ₹7.46–8.16/kWh for solar. Most states can recover PV investment within 2.4–5.4 years. The findings support a policy shift toward capital subsidies for decentralized solar PV, offering both fiscal relief and environmental benefits. The study contributes to evidence-based policymaking for sustainable agriculture and cleaner energy transitions in India.