Access to electricity benefited larger, populous villages disproportionately more than hamlets with fewer households, an analysis of the Rajiv Gandhi Grameen Vidyut Yojana – a programme launched in 2005 to provide and improve electricity access to roughly 4,00,000 Indian villages. Villages with fewer than 300 people saw limited benefits as opposed to those with 1,000 but the gains jumped dramatically in villages that had 2,000 or more people, the analysis by researchers at the University of Chicago and University of Maryland states.
Per-capita monthly expenditure in villages of about 300 people barely changed. However, larger villages (of about 2,000 people), saw a doubling of per-capita expenditure due to full electrification, an increase of about ₹1,428 (about $17) per month, the study, which relied on statistical analysis of public data, says.
“It’s clear that electricity access boosts GDP at the national level, but does it necessarily improve the lives of those living in small communities? We found the answer to be ‘no,’” co-author Fiona Burlig, an assistant professor at the Chicago university’s Harris School of Public Policy, said in a statement.
“While we see large benefits to larger villages, bringing electricity access to the smallest, remote villages is expensive, and it doesn’t necessarily lift them out of poverty. It may well be much more cost-effective to do smaller solar home systems or minigrids in small, remote locations and expand the grid to the larger villages,” she added.
In computing the economic gains from electricity access, the researchers relied on data on consumption as well as the number of industrial outlets and employment in villages.
Smaller 300-person villages experience “zero return” from electrification after 20 years and full electrification had less than a 27% chance of generating economic benefits that exceed upfront costs. The 1,000-person villages experience a 13% return, just barely exceeding the benchmark for cost effectiveness. But as the village size increases to 2,000 people, there was a 33% return, far exceeding the cost-effectiveness benchmark. These villages have a 90 percent change of generating economic benefits that exceed upfront costs, the study, published in the Journal of Political Economy this month, says.
In 2018, Prime Minister Narendra Modi said that all villages in India were electrified though the current government’s commitment to provide 24/7 power to all villages is still a work in progress.
The RGGVY, now renamed as the Deen Dayal Upadhyay Gram Jyoti Yojana in 2015, made villages with 300 or more inhabitants eligible for electrification, and villages with fewer than 300 people ineligible. The program also had a staggered rollout, with some districts receiving grid access during a first wave, and others during a second wave. The researchers used these rules to conduct a “natural experiment,” comparing villages just large enough to be eligible for electricity access with those just too small to be eligible, as well as comparing villages before and after electrification. They obtained their electrification data from both administrative sources and satellite imaging of night-time brightness, which serves as a proxy for electricity consumption.
The analysis is based on census data of 2011, the last comprehensive source of official data in India as no census has been conducted since. Currently close to 99% of India has been electrified. One of the authors told The Hindu that the findings would largely hold true even if the sources of power were solar, wind or hydropower than the coal-power which is the mainstay of electricity in India. India’s future expansion of electricity is largely premised on non fossil-fuel energy sources.
Published - September 10, 2024 10:25 pm IST
