Though the popular perception in India is that electricity for irrigation creates the biggest hurdle against electricity reforms in the country, the empirical evidence indicates a different picture, reports V. Santhakumar in ‘Analysing Social Opposition to Reforms: The electricity sector in India’ (www.sagepublications.com). The aggregate response at the state level is determined more by residential households because of their very high number, he adds. “Thus, subsidy given for residential consumption of electricity is a far more decisive factor in the opposition to reform.”
The author urges states to go for creative interventions to enhance connectivity. At least in some states, he says, significant amounts of money for extending connections to the poor can be obtained by taking away subsidy from the upper income groups.
Of interest, in this context, is a nugget of information based on the distribution of monthly subsidy among different deciles of connected consumers in Kerala – that the richest 20 per cent of households get an average of Rs 150 whereas the poorest get only Rs 80. “This would mean that if electricity subsidy at the current level is limited to the poor (say the bottom 50 per cent of the households), then the amount saved is more than adequate to provide a one-time expenditure for extending electricity connections to all the poor that do not have electricity supply within the state.”