Access for All? The Puzzle of Rural Electrification in India - Florence Au

 Florence Au is a graduate intern with Asia Catalyst.  She is a graduate student in New York University's M.Sc. in Global Affairs program.

    India is a country of great diversity and contradictions.  In a country of 1.1 billion people, there were 465 million mobile subscribers at the end of September 2009. Yet, in the same period India also had the largest number of people in the world without access to electricity.  The per capita electricity consumption rate in India is 480Wh/capita in 2005; lower than the rates of Brazil, Zimbabwe and Mexico, among other developing countries.   In response to this challenge, the Indian government has launched an ambitious new program to provide electricity to 100% of households by 2012.

     Launched in 2005, the RAJIV GANDHI GRAMEEN VIDYUTIKARAN YOJANA (RGGVY) programme aims to enable access to electricity to all rural households, through  government-provided financial support in the form of grants and loans.  The plan encompasses not only the extension of the electricity grid but also the possibility of non-conventional energy sources where grid extension is not feasible.

      The state hopes that having access to reliable and affordable energy will allow more opportunities for impoverished communities to generate income and use  modern appliances and equipment.  Most rural poor in India do not have access to natural gas for cooking because some cities simply do not have the natural gas network; instead, their only choice of fuel is kerosene.   Kerosene, however, is not considered clean energy as it emits high levels of pollution and the toxicity is often trapped within the home.  In the long run, this is especially dangerous for women who are usually responsible for preparing food. 

      Yet the relationship between access to electricity and poverty reduction is complex, and analysts are divided on the subject. Some argue that there is a positive relationship between energy consumption and Gross Domestic Product, as well as between energy consumption and the Human Development Index. The other perspective argues that rural electrification is not enough to solve the energy access problem in India, as the energy requirements of the poor are such that biomass, kerosene and gas are more economically feasible fuels compared to electricity.  Within this context, the Government of India believes firmly that access to electricity through the RGGVY programme will improve rural productivity and enable opportunities for income generation.

      The Government of India's ambitious programme has attracted some critical evaluation from academics and policymakers alike.  Although improved access to electricity has benefited the agricultural sector by improving irrigation practices and enhancing crop yields it appears that the rural electrification targets set by the government are not being met.  This is partly due to the inefficient tariff scheme and the ineffective regulatory environment of the power sector at the state level.   Therefore the outlook for achieving the goal of complete household electrification by 2012 is bleak.  

      This outlook is especially bleak with regards to extending the grid infrastructure to rural areas.  A few challenges are the inhibitive capital costs and high levels of transmission and distribution losses.   One reason for the high transmission loss is that it is a naturally occurring phenomenon with geographically large areas, another less obvious reason is the existence of energy theft and corruption.  This has led to suggestions for decentralized generation of power using non-conventional energy sources such as solar, biogas or wind energy that can be generated locally, on a smaller scale.  This  promising venture is soliciting the interest and collaboration of private sector developers, NGOs and even local stakeholders, including co-operatives formed by villages.  The power sector revolution will not ultimately be successful for India, however, if the government does not take on a frank assessment of past efforts and move forward on a reform of the power sector that is both economically and politically feasible.