Does the quality of electricity matter? Evidence from rural India

Abstract

This paper estimates the returns to household income due to improved access to electricity in rural India. We examine the effect of connecting a household to the grid and the quality of electricity, defined as hours of daily supply. The analysis is based on two rounds of a representative panel of more than 10,000 households. We use the district-level density of transmission cables as instrument for the electrification status of the household. We find that a grid connection increases non-agricultural incomes of rural households by about 9 percent during the study period (1994)(1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005). However, a grid connection and a higher quality of electricity (in terms of fewer outages and more hours per day) increases non-agricultural incomes by about 28.6 percent in the same period.JEL classification: O12, O18, Q48

The impact of rural electrification on income and education: Evidence from Bhutan

“…Similarly, the instrumental variable estimates of the effect of electrification on household income in Chakravorty et al. () ranged between 86.7 and 89.8 percent.…”

“…Some of the rigorous efforts to determine attribution of RE on development outcomes in developing countries include Chakravorty et al. (), Dinkelman (), Lipscomb et al. (), and Rud ().…”

“…Some of the rigorous efforts to determine attribution of RE on development outcomes in developing countries include Chakravorty et al (2014), Dinkelman (2011), Lipscomb et al (2013), and Rud (2012). The first study examined impact of electrification on income, the second study on female employment and wages, the third on income, poverty, and Human Development Index, and the fourth on industrial outputs.…”

“…The nonrandom selection of projects is likely to bias the comparison of electrified and nonelectrified groups and would be confounded with the unobserved heterogeneity. Some of the previous studies on this topic either have relied on randomized experiments (Bernard & Torero, 2015) or instrumental variables (IV) methods to deal with the fact that access to electricity is not randomly assigned (Chakravorty, Pelli, & Beyza, 2014;Dinkelman, 2011;Rud, 2012).…”

Perceptions towards solar mini‐grid systems in India: A multi‐stakeholder analysis

“…Rural consumers often mistrust electricity from the centralized utility due to the increased costs from factors such as remoteness and grid expansion (Chaurey, ; Sharma, ). Studies show that a simple connection to the grid provides limited returns to household income due to low quality of grid‐provided energy (Chakravorty et al ., ). Central electricity providers are criticized for their “neglect of the consumer” and lacking sensitivity to consumer expectations (Sharma, ), contributing to consumer demand for alternative electrification options.…”