The Economic Effects of Electricity Deregulation: An Empricial Analysis of Indian States
AbstractAs developing countries seek to improve their economic prospects, electricity reform has been widely viewed as a central part of this effort.While the focus of most research to date has been at economy or utility level; there has been much less research on regional outcomes. India presents a unique case, as its states share a common economic and political system, whilst having been given considerable flexibility in how they implement reform, thus allowing a comparative analysis of alternative approaches. This study contributes through an econometric analysis of the determinants and impact of electricity reform in India, giving special regard to its political economy and regional diversity. It assesses how electricity reform in India has affected key economic variables that determine sectoral efficiency, prices and investment flows. We use panel data for 19 states, spanning 1991-2007, using dynamic panel data estimators. Results show that individual reform measures have affected key economic variables differently; thus the nature of reform in individual states would determine these economic outcomes. Findings suggest that due to political economy factors influencing reform, outcomes have tended to be adverse in the initial stages, as previously hidden distortions become apparent. The performance of reforms, however, may improve as it progresses beyond a ‘baseline’ level.
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Bibliographic InfoPaper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 1005.
Date of creation: 22 Jan 2010
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Electricity; India; reform; deregulation; regional impacts;
Find related papers by JEL classification:
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
- R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
- L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-02-05 (All new papers)
- NEP-CWA-2010-02-05 (Central & Western Asia)
- NEP-ENE-2010-02-05 (Energy Economics)
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- Kabir Malik & Maureen Cropper & Alexander Limonov & Anoop Singh, 2011. "Estimating the Impact of Restructuring on Electricity Generation Efficiency: The Case of the Indian Thermal Power Sector," NBER Working Papers 17383, National Bureau of Economic Research, Inc.
- Nepal, Rabindra, 2011. "Energy efficiency in transition: do market-oriented economic reforms matter?," MPRA Paper 33349, University Library of Munich, Germany.
- Gisèle Schmid, 2011. "The development of renewable energy power in India: which policies have been effective?," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva 11103, Institut d'Economie et Econométrie, Université de Genève.
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