By Florence Au
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) program
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 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 Indian government believes that access to electricity through the RGGVY program
will improve rural productivity and enable opportunities for income generation.
The ambitious program 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.
Florence Au is a graduate intern with Asia
Catalyst. She is also a graduate student
in New York University’s M.Sc. in Global Affairs program.
