Sunday, July 20, 2008

India's Rural Energy Security - Factsheet

Indian economy is growing and needs more and more energy to maintain its growth (at least growth of that part of India, which is growing). Therefore, there is much discussions about the Energy Security needs of India. In fact, this coming week the current UPA government may fall (or survive) for the option it has chosen.

However, there is also a need to differentiate between the urban and rural energy security, to have a meaningful public debate/discourse on the issue.

Here are some facts, which I could collect:

  • There are around 640,000 villages in India, accounting for about 70% of the population. Of these, according to GOI, in 2004, 475,000 (i.e., around 74%) villages were "electrified".

  • Since independence, India had made strides in Rural Electrification, increasing the number of electrified villages from 1,500 in 1947 to 481,124 villages by 1991. After that, however, as a part of the "liberalisation" and "reforms" process, a number of villages were "de-electrified", decreasing the number to 474,928 by 2004.

  • GOI's definition of electrification, till a couple of years back, however, was any village which is connected to the grid (to quote: "A village will be deemed to be electrified if electricity is used in the inhabited locality within the revenue boundary of the village for any purpose what-so-ever"). The definition has no mention about the number of households using electricity... Thus, a single pole and a 40W bulb in the local police station sufficed for village "electrification". (thankfully, it got changed to a definition of electrification as electricit reaching to 10% households then)

  • Therefore, the actual number of rural population with access to electricity is much lower than the 74%. Of the approximately 138mn rural households, only around 60mn (i.e., 43%) have access to electricity (compared to 87.6% in urban India)...

  • ...which would roughly mean (taking an average of 5 persons/family), around 285mn rural people (or around 26% of total Indian population) do not have access to electricity.

  • The rate of Rural Electrification is slow, and lags on targets. Under India's Rural Electrification initiative (Rajiv Gandhi Grameen Vidyutikaran Yojana - RGGVY - launched in April'05), the target is to provide grid connection to 125,000 villages and 23.4mn rural households by March'09. However, as on July'08 - with just 9 months to go - only 51,122 village have got electrified, giving access to electricity to mere 3.3mn rural households.

  • The power generation capacity of a state seems to be delinked to availability of power to rural households. In fact, in most cases it is inversely proportional.

  • For instance, Jharkhand, is a "power-surplus" state, where 90% rural households have no electricity; similarly, Orissa and West Bengal - both with surplus electricity - have 80% un-electrified rural households. Chattisgarh, too - another power-surplus state - can boast only of providing power to 46% of its rural households.

  • On the other hand, states which provide electricity to their rural households - Himachal Pradesh (95%), Punjab (90%), Haryana (78%), Karnataka (72%), Gujarat (72%), Maharashtra (65%), etc. - are all power-deficit states.

  • In practice, however, even in these states where large proportion of rural households are connected to grid, the actual availability of power is scant. Since, these are power-deficit states, load-shedding is inevitable. However, bulk of load-shedding is done in the rural areas (whose requirement for electricity is seen as less or limited). Some examples:

      - A news item about load-shedding in Karnataka last year says:
      "The State Government will not enforce load-shedding in urban areas in March and April as students will be preparing for their examinations, Minister for Energy H.D. Revanna has said."
      [which may sound strange if one knows that of the 47,000 schools in Karnataka, more than 41,000 are in rural area]

      - Similarly, a recent news item from Maharashtra, mentions:
      "In highly industrialised urban areas, the load shedding will be from four to seven hours. In other urban areas, it will be from seven to 8.5 hours, while in the rural areas it will be for 11 hours, according to an official release said here today."

  • There are also legitimate technical and economic reasons for lesser priority to rural area. The cost of connecting to grid far-flung villages, payment default and electricity theft, high costs of supply and maintenance, etc., make rural electrification through the grid financially unviable. To quote from the report on "Rural Electrification in India: Economic and Institutional aspects of Renewables (the references have been deleted for easy reading):

      "Grid connection remains the most favoured approach to rural electrification for the majority of rural households. Indeed the latest government programme for rural electrification, the RGGVY, focuses in particular on a vast expansion of the existing grid to reach all villages by 2012. Whilst state utilities typically report an average cost of supply at around Rs.3/kWh most studies... suggest that cost of delivery to rural areas can be around three times generation costs. A recent estimate for a Gujarat case study, based on Gujarat Electricity Board data, put the true cost of delivery to rural areas at over Rs.9/kWh.

      As the distance from the grid increases, the cost of grid connection rises considerably. It increases costs by roughly Rs1/kWh per kilometre of expansion to individual villages. Typically grid tariffs for poor rural households range from Rs.0-10/month for the poorest households and Rs.0-130/month for remaining domestic customers. These charges typically lie well below the cost of supply and are sustained through redistributive policies, tariff cross-subsidies and financial relief to loss-making State electricity boards (SEB).

  • Often a faulty understanding of rural energy needs is also a reason. It is generally believed that the major economic benefit of electricity would be to feed India's 11mn irrigation pumps for farming. Since one would not be using pumps all 24hrs, or can use it off-peak hours, if load-shedding has to be done due to scarcity, then villages need it less as compared to urban areas. For instance, Maharashtra State Electricity Board's note on the "Principles and Protocol of Load Shedding by MSEB" to the Maharashtra Electricity Regulatory Authority, says:

      "The dependability of rural areas on electricity is less as compared to the dependability of urban areas. The agricultural sector normally does not require power for 24 hours. This concept has also been accepted by the Hon. Commission during the discussions on the tariff proposals wherein a maximum of 13 hours use per day is considered for agricultural pumps."

  • This equation of "rural" with "agricultural sector" leads to an argument, which misses out the energy requirements of rural schools (and its students), households and enterprises.

  • For instance, according to DISE's School Based indicators report:

      - 91% of the 0.7mn schools are located in rural areas
      - of the approx 28,000 integrated higher secondary schools (i.e., from primary to higher secondary), about 62% are in villages
      - overall about 87% of India's schools are in rural areas

  • Similarly, according to the Economic Census 2005:

      "...there are 42.12 million enterprises in the country engaged in different economic activities other than crop production and plantation. Out of which, 25.81 million enterprises (61.3%) are in the rural areas and 16.31 million enterprises (38.7%) in the urban areas." These rural non-farm enterprises also account for 51% of employment.

  • As a result of all these, India's 70% population living in villages have access to just 33% of India's total generated electricity - that too of poor quality, much below the rated frequency and voltage.
  • ...

  • ...and they will continue to remain dis-enfranchised from the access to electricity, as long as the guiding blueprint to India's Energy Security

  • is defined through urban lenses, and

  • is defined by centralised mega-thermal/hydro/nuclear plants, and feeder grids...

  • So, are there any options?

    ...of course, there are!!! - but that will need another post!...


    csm said...

    madhukar - excellent article like all others you write.
    TOI mumbai carried a small series on how our netas use/abuse power.
    here are the 2 links.
    July 21st -
    July 22nd -

    Rishi said...

    Great post, backed with data.

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    abhi said...

    Hey could you please state some of your sources.
    THank YOu

    madhukar said...


    all the sources are in the links in the article itself