Electrification and Welfare of Poor Households in Rural India

We examine the impact of electrification on the welfare of poor households in rural India. We use two rounds of survey data (2004-2005 and 2011-2012) from the National Sample Survey Organization, and examine household welfare as captured by monthly and annual expenditures on multiple categories of goods and services among the poorest households. Using inverse propensity score weighting and difference-in-differences estimation in two separate analyses for households across all states and in eight backward states, we find significant evidence for improved welfare from electrification. This includes higher monthly expenditures in total as well as on food, fuel, entertainment, nonfood, education, and durable goods across all states. We also find evidence for higher expenditures in selected categories of goods like fuel, entertainment, nonfood, and education items after electrification in backward states. Additionally, we find that the poorest rural households in backward states experienced reduced medical expenditures after electrification.