A statement issued by the state government said that the increase in tariffs would now be reduced by six percentage points to 14 per cent and come into effect from Sunday. The statement said that after the rollback, consumers will pay Rs 1.35 per unit of power for the first 50 units consumed against the earlier proposed Rs 1.45.

Under subsequent slabs of consumption, the hike has been brought down to Rs 2.95 from the proposed Rs 3.90, Rs 4.50 from Rs 6.15, and Rs 5.25 from Rs 7.05.

The decision comes in the wake of a week of protests and a politically explosive situation which the Chief Minister had to face from both within and outside the Telegu Desam Party.

Last month, the Andhra Pradesh Electricity Regulatory Commission (APERC), an independent power regulatory body, had recomm ended a sweeping 20 per cent hike in power tariffs to fetch an additional Rs 10.95 billion in revenues for power generation and transmission firms.

"The (proposed) hike is abnormal...reforms should have a human face and only then can it be meaningful reform," Naidu told reporters after announcing the decision in Hyderabad.

The total direct subsidy provided to the farm and domestic consumers, in the form of a reimbursement to APTRANSCO for the power supplied by it, comes to Rs 1,630 crore, apart from a debt-servicing burden of Rs 745 crore on bonds raised by the fledgling AP Power Finance Corporation.

Asked how the state exchequer would raise the additional Rs 286 crore, the Chief Minister did not have an answer. However, the fact remains that the state is in dire financial straits, a fact which Naidu had admitted at his previous press conference on Thursday, again on the same issue of powertariffs.