Value Added Article: Rural Electrification in India | Category – Infrastructure Development | Source – EPW

Relevance: GS Paper III (Indian Economy)


Economic and Political Weekly

Why has this issue cropped up?

Recently, the government launched the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya) for universal household electrification in 2017 and subsequently announced the electrification of all villages in 2018.

Evolution of electrification in India

  • Rural electrification has evidenced a paradigm shift from demand-driven village electrification programmes of the 1950s to the 1990s, to small targeted household electrification drives between the 1980s and 2005.
  • Concerted efforts began with the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) in 2005 that aimed to provide free electricity connections to rural households below the poverty line (BPL), besides creating rural electricity infrastructure. This was followed by successive central government schemes, which were based on similar programme design.
  • The state electricity boards (SEBs) set up immediately after independence had the mandate to supply electricity beyond the major cities. Rural electrification was then a by-product of electrifying towns, and villages near the grid benefited
  • The pace of rural electrification slowed down during the power sector reforms initiated in the 1990s where the focus was on efficiency improvement and financial health of the sector
  • The Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) was launched in 2014. The programme had infrastructure works and connections as envisaged under RGGVY and also allocations for further investment work.
  • Further, in 2014, the central and state governments also drafted joint plans to ensure 24 × 7 “Power for All” (PFA) by 2022.
  • The current government further launched the “Saubhagya” scheme to provide connections to the remaining unconnected households by 2019. Unlike the previous schemes, Saubhagya aims to provide connections to all non-electrified households, whether BPL or not. While the BPL households can get free connections, non-BPL households have to pay a nominal amount of ₹500 in 10 installments.

The roadblocks in the path of universal electrification

  • While there is progress in giving connections, network investments for rural electrification have been slower than planned. Lack of timely network investments jeopardises the provision of reliable, affordable power supply.
  • The distribution transformers catering to villages had the capacity to support the load of only 10% of the households and thus the instances of overloading and transformer breakdowns are significant.
  • While the connection challenge has been nearly addressed, supply and service quality issues still persist in the sector. If supply is not affordable or the quality of supply and service is poor, it is likely that consumers will get disconnected.
  • In rural areas, evidences of supply being given without proper meters/meters not being read correctly/and bills being issued without proper meter readings are commonplace.
  • Further, there are also instances of billing delays, particularly in issuing the first bill after connection. This increases the likelihood of payment defaults leading to disconnection of supply.
  • Only 7%–10% rural locations receive supply during the full evening hours (5 pm to 11 pm).
  • In the first phase of RGGVY, rural franchisees were expected to manage distribution operations in newly electrified areas. However, most of them are not operational and DDUGJY does not envisage such franchisees.

Way forward

  • Concerted efforts to monitor supply hours for rural, remote and newly electrified households are needed.
  • Further, the rural distribution networks require investments to tide over the operation and maintenance challenges that lead to frequent failures of DTs and line faults, requiring long repair times.
  • There is a need to hold DISCOMs accountable for monitoring of supply quality and operation and maintenance efforts in rural areas in order to ensure uninterrupted supply.
  • In many states, small industrial and commercial consumers pay tariff rates comparable to large industrial units and commercial complexes .There needs to be innovation in tariff design to encourage home-based or small enterprises in newly electrified villages
  • Non-household activities need not be limited to enterprises only, but also encompass schools, primary health centres, anganwadis, police stations, post offices and other village-level institutions.
  • Parameters such as DT failure rate, hours of supply (especially during evening hours), metering and billing information , information on consumer disconnections, new connections for entrepreneurial use, electrification of rural institutions., could be tracked and reported on the national dashboards on a monthly basis for every district or division.
  • With usage technology to monitor hours of supply, the duration of supply and interruptions can be recorded without manual intervention and tracked at a disaggregated level. This information can be used by SERCs and consumers to make DISCOMs more accountable for power supply.
  • The financial health and operational efficiency of DISCOMs is subject to tremendous scrutiny under bailout schemes like UDAY . There needs to be similar emphasis and political discourse on supply and service quality issues to hold DISCOMs accountable for the same.
  • Currently, supply of one unit of power costs the DISCOMs about ₹7 and this cost will most likely increase at a rate of more than 4% per unit in the coming years . As such costs will be unaffordable for many consumers, and with the contribution of cross-subsidies reducing, substantial subsidy support will be necessary.
  • Several ideas like prepaid metering and direct benefit transfer (DBT) are being proposed to handle the metering, billing and subsidy issues . Considering the limited financial and IT literacy of rural consumers, as well as the challenges in internet reliability, it is better to try out pilots before rolling out such solutions on a large scale
  • Even after the targets of connections are met, there is a need for a national institution, with rural electrification as its key focus. Its mandate need not be to operate the rural distribution businesses but to provide knowledge and financial support to DISCOMs for maintaining and strengthening the rural network and ensuring supply.


Though there are several issues, it seems likely that India will have 100% household connections by 2022.