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Diversity in Unity: An Empirical Analysis of Electricity Deregulation in Indian States

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  • Anupama Sen and Tooraj Jamasb

Abstract

As 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 to reform. This study presents 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, outcomes have tended to be adverse in the initial stages of reform, as previously hidden distortions become apparent. The performance of reforms, however, may improve as the reform progresses beyond a `baseline' level.

Suggested Citation

  • Anupama Sen and Tooraj Jamasb, 2012. "Diversity in Unity: An Empirical Analysis of Electricity Deregulation in Indian States," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
  • Handle: RePEc:aen:journl:33-1-a04
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    1. repec:kap:regeco:v:51:y:2017:i:1:d:10.1007_s11149-016-9313-7 is not listed on IDEAS
    2. Khan, Muhammad T. & Thopil, George Alex & Lalk, Jorg, 2016. "Review of proposals for practical power sector restructuring and reforms in a dynamic electricity supply industry," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 326-335.
    3. Nepal, Rabindra & Jamasb, Tooraj, 2012. "Reforming the power sector in transition: Do institutions matter?," Energy Economics, Elsevier, vol. 34(5), pages 1675-1682.
    4. repec:ebl:ecbull:eb-17-00173 is not listed on IDEAS
    5. Rabindra Nepal & Tooraj Jamasb & Clement Allan Tisdell, 2014. "Market-related reforms and increased energy efficiency in transition countries: empirical evidence," Applied Economics, Taylor & Francis Journals, vol. 46(33), pages 4125-4136, November.
    6. Nepal, Rabindra & Jamasb, Tooraj, 2015. "Caught between theory and practice: Government, market, and regulatory failure in electricity sector reforms," Economic Analysis and Policy, Elsevier, vol. 46(C), pages 16-24.
    7. Kabir Malik, Maureen Cropper, Alexander Limonov and Anoop Singh, 2015. "The Impact of Electricity Sector Restructuring on Coal-fired Power Plants in India," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    8. Jamasb, Tooraj & Llorca, Manuel & Khetrapal, Pavan & Thakur, Tripta, 2018. "Institutions and Performance of Regulated Firms: Evidence from Electric Utilities in the Indian States," Efficiency Series Papers 2018/03, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    9. Sawhney, Aparna & Rahul, M., 2014. "Examining the regional pattern of renewable energy CDM power projects in India," Energy Economics, Elsevier, vol. 42(C), pages 240-247.
    10. Arina Nikandrova & Jevgenijs Steinbuks, 2017. "Contracting for the second best in dysfunctional electricity markets," Journal of Regulatory Economics, Springer, vol. 51(1), pages 41-71, February.
    11. Tooraj Jamasb & Rabindra Nepal & Govinda Timilsina & Michael Toman, 2014. "Energy Sector Reform, Economic Efficiency and Poverty Reduction," Discussion Papers Series 529, School of Economics, University of Queensland, Australia.
    12. Du, Limin & He, Yanan & Yan, Jianye, 2013. "The effects of electricity reforms on productivity and efficiency of China's fossil-fired power plants: An empirical analysis," Energy Economics, Elsevier, vol. 40(C), pages 804-812.
    13. repec:aen:journl:ej38-3-jamasb is not listed on IDEAS
    14. Du, Gang & Sun, Chuanwang & Fang, Zhongnan, 2015. "Evaluating the Atkinson index of household energy consumption in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 51(C), pages 1080-1087.
    15. Jamasb,Tooraj & Nepal,Rabindra & Timilsina,Govinda R., 2015. "A quarter century effort yet to come of age : a survey of power sector reforms in developing countries," Policy Research Working Paper Series 7330, The World Bank.
    16. Rabindra Nepal & John Foster & Antonio Carvalho, 2014. "Revisiting Electricity Liberalization and Security of Supply: Empirical Evidence," Energy Economics and Management Group Working Papers 7-2014, School of Economics, University of Queensland, Australia.
    17. Rabindra, Nepal & Tooraj, Jamasb, 2013. "Caught Between Theory and Practice: Government, Market, and Regulatory Failure in Electricity Sector Reforms," SIRE Discussion Papers 2013-22, Scottish Institute for Research in Economics (SIRE).

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