IDEAS home Printed from https://ideas.repec.org/a/eco/journ2/2021-06-28.html
   My bibliography  Save this article

Determinants of Household Electricity Demand in Rural India: A Case Study of the Impacts of Government Subsidies and Surcharges

Author

Listed:
  • Sijousa Basumatary

    (Department of Economics, Bodoland University, India.)

  • Mridula Devi

    (Department of Economics, Bodoland University, India.)

  • Konita Basumatary

    (Department of Economics, Bodoland University, India.)

Abstract

This paper analyses the determinants of household electricity consumption with the focus to find the impact of government subsidies and surcharges on the demand for electricity services in the rural areas. Using surveyed household data of 332 samples, quantile regression has been employed for checking heterogeneity in electricity demand across different quantile of households. We find government subsidy has enhanced the household demand for electricity consumption with the elasticity ranging from 45 to 65 percent. Skeptically, electricity consumers of higher quantile tend to consume more even in the presence of outstanding bill while it is the opposite for low quantile group. Surprisingly, income and other socioeconomics variables don t necessarily affect the households demand for electricity. This implies demand for electricity is inelastic to income and selected socioeconomic variables in rural regions. However, electricity demand decreases for households with dwelling characteristics categorized as poorer quantile. Based on our empirical findings implications are drawn for policy makers.

Suggested Citation

  • Sijousa Basumatary & Mridula Devi & Konita Basumatary, 2021. "Determinants of Household Electricity Demand in Rural India: A Case Study of the Impacts of Government Subsidies and Surcharges," International Journal of Energy Economics and Policy, Econjournals, vol. 11(6), pages 243-249.
    • Handle: RePEc:eco:journ2:2021-06-28
    as

    Download full text from publisher

    File URL: https://www.econjournals.com/index.php/ijeep/article/download/11716/6124
    Download Restriction: no
    File URL: https://www.econjournals.com/index.php/ijeep/article/view/11716/6124
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Tilov, Ivan & Farsi, Mehdi & Volland, Benjamin, 2020. "From frugal Jane to wasteful John: A quantile regression analysis of Swiss households’ electricity demand," Energy Policy, Elsevier, vol. 138(C).
    2. Cramer, James C. & Miller, Nancy & Craig, Paul & Hackett, Bruce M. & Dietz, Thomas M. & Vine, Edward L. & Levine, Mark D. & Kowalczyk, Dan J., 1985. "Social and engineering determinants and their equity implications in residential electricity use," Energy, Elsevier, vol. 10(12), pages 1283-1291.
    3. Wiesmann, Daniel & Lima Azevedo, Inês & Ferrão, Paulo & Fernández, John E., 2011. "Residential electricity consumption in Portugal: Findings from top-down and bottom-up models," Energy Policy, Elsevier, vol. 39(5), pages 2772-2779, May.
    4. Cialani, Catia & Mortazavi, Reza, 2018. "Household and industrial electricity demand in Europe," Energy Policy, Elsevier, vol. 122(C), pages 592-600.
    5. Nidhi Tewathia, 2014. "Determinants of the Household Electricity Consumption: A Case Study of Delhi," International Journal of Energy Economics and Policy, Econjournals, vol. 4(3), pages 337-348.
    6. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    7. Huebner, Gesche & Shipworth, David & Hamilton, Ian & Chalabi, Zaid & Oreszczyn, Tadj, 2016. "Understanding electricity consumption: A comparative contribution of building factors, socio-demographics, appliances, behaviours and attitudes," Applied Energy, Elsevier, vol. 177(C), pages 692-702.
    8. Wassie, Yibeltal T. & Rannestad, Meley M. & Adaramola, Muyiwa S., 2021. "Determinants of household energy choices in rural sub-Saharan Africa: An example from southern Ethiopia," Energy, Elsevier, vol. 221(C).
    9. Athukorala, Wasantha & Wilson, Clevo & Managi, Shunsuke & Karunarathna, Muditha, 2019. "Household demand for electricity: The role of market distortions and prices in competition policy," Energy Policy, Elsevier, vol. 134(C).
    10. Nic Rivers & Mark Jaccard, 2011. "Electric Utility Demand Side Management in Canada," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 93-116.
    11. Banfi, Silvia & Filippini, Massimo & Hunt, Lester C., 2005. "Fuel tourism in border regions: The case of Switzerland," Energy Economics, Elsevier, vol. 27(5), pages 689-707, September.
    12. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    13. Kavousian, Amir & Rajagopal, Ram & Fischer, Martin, 2013. "Determinants of residential electricity consumption: Using smart meter data to examine the effect of climate, building characteristics, appliance stock, and occupants' behavior," Energy, Elsevier, vol. 55(C), pages 184-194.
    14. Romero-Jordán, Desiderio & del Río, Pablo & Peñasco, Cristina, 2016. "An analysis of the welfare and distributive implications of factors influencing household electricity consumption," Energy Policy, Elsevier, vol. 88(C), pages 361-370.
    15. Mirnezami, Seyed Reza, 2014. "Electricity inequality in Canada: Should pricing reforms eliminate subsidies to encourage efficient usage?," Utilities Policy, Elsevier, vol. 31(C), pages 36-43.
    16. Pachauri, Shonali, 2004. "An analysis of cross-sectional variations in total household energy requirements in India using micro survey data," Energy Policy, Elsevier, vol. 32(15), pages 1723-1735, October.
    17. Narayan, Paresh Kumar & Smyth, Russell & Prasad, Arti, 2007. "Electricity consumption in G7 countries: A panel cointegration analysis of residential demand elasticities," Energy Policy, Elsevier, vol. 35(9), pages 4485-4494, September.
    18. Bartusch, Cajsa & Odlare, Monica & Wallin, Fredrik & Wester, Lars, 2012. "Exploring variance in residential electricity consumption: Household features and building properties," Applied Energy, Elsevier, vol. 92(C), pages 637-643.
    19. Mansouri, Iman & Newborough, Marcus & Probert, Douglas, 1996. "Energy consumption in UK households: Impact of domestic electrical appliances," Applied Energy, Elsevier, vol. 54(3), pages 211-285, July.
    20. Al-Bajjali, Saif Kayed & Shamayleh, Adel Yacoub, 2018. "Estimating the determinants of electricity consumption in Jordan," Energy, Elsevier, vol. 147(C), pages 1311-1320.
    21. Tiwari, Piyush, 2000. "Architectural, Demographic, and Economic Causes of Electricity Consumption in Bombay," Journal of Policy Modeling, Elsevier, vol. 22(1), pages 81-98, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wassie, Yibeltal T. & Ahlgren, Erik O., 2023. "Determinants of electricity consumption from decentralized solar PV mini-grids in rural East Africa: An econometric analysis," Energy, Elsevier, vol. 274(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Javier Bueno & Desiderio Romero-Jordán & Pablo del Río, 2020. "Analysing the Drivers of Electricity Demand in Spain after the Economic Crisis," Energies, MDPI, vol. 13(20), pages 1-18, October.
    2. Satre-Meloy, Aven, 2019. "Investigating structural and occupant drivers of annual residential electricity consumption using regularization in regression models," Energy, Elsevier, vol. 174(C), pages 148-168.
    3. Huebner, Gesche & Shipworth, David & Hamilton, Ian & Chalabi, Zaid & Oreszczyn, Tadj, 2016. "Understanding electricity consumption: A comparative contribution of building factors, socio-demographics, appliances, behaviours and attitudes," Applied Energy, Elsevier, vol. 177(C), pages 692-702.
    4. Besagni, Giorgio & Borgarello, Marco, 2018. "The determinants of residential energy expenditure in Italy," Energy, Elsevier, vol. 165(PA), pages 369-386.
    5. Jones, Rory V. & Fuertes, Alba & Lomas, Kevin J., 2015. "The socio-economic, dwelling and appliance related factors affecting electricity consumption in domestic buildings," Renewable and Sustainable Energy Reviews, Elsevier, vol. 43(C), pages 901-917.
    6. Nsangou, Jean Calvin & Kenfack, Joseph & Nzotcha, Urbain & Ngohe Ekam, Paul Salomon & Voufo, Joseph & Tamo, Thomas T., 2022. "Explaining household electricity consumption using quantile regression, decision tree and artificial neural network," Energy, Elsevier, vol. 250(C).
    7. Athukorala, Wasantha & Wilson, Clevo & Managi, Shunsuke & Karunarathna, Muditha, 2019. "Household demand for electricity: The role of market distortions and prices in competition policy," Energy Policy, Elsevier, vol. 134(C).
    8. Fei Wang & Yili Yu & Xinkang Wang & Hui Ren & Miadreza Shafie-Khah & João P. S. Catalão, 2018. "Residential Electricity Consumption Level Impact Factor Analysis Based on Wrapper Feature Selection and Multinomial Logistic Regression," Energies, MDPI, vol. 11(5), pages 1-26, May.
    9. Wang, Yuanping & Hou, Lingchun & Hu, Lang & Cai, Weiguang & Wang, Lin & Dai, Cuilian & Chen, Juntao, 2023. "How family structure type affects household energy consumption: A heterogeneous study based on Chinese household evidence," Energy, Elsevier, vol. 284(C).
    10. Tilov, Ivan & Farsi, Mehdi & Volland, Benjamin, 2020. "From frugal Jane to wasteful John: A quantile regression analysis of Swiss households’ electricity demand," Energy Policy, Elsevier, vol. 138(C).
    11. Noriza Mohd Saad & Erna Farina Mohamed & Mohamad Taufik Mohd Arshad & Ahmad Lutfi Mohayiddin, 2023. "Electricity Tariff Changes and Consumer Sentiment on Household Consumption Expenditure in Malaysia," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 21(1), pages 175-191, March.
    12. Sharif Shofirun Sharif Ali & Muhammad Rizal Razman & Azahan Awang & M. R. M. Asyraf & M. R. Ishak & R. A. Ilyas & Roderick John Lawrence, 2021. "Critical Determinants of Household Electricity Consumption in a Rapidly Growing City," Sustainability, MDPI, vol. 13(8), pages 1-20, April.
    13. Chalal, Moulay Larbi & Benachir, Medjdoub & White, Michael & Shahtahmassebi, Golnaz & Cumberbatch, Miranda & Shrahily, Raid, 2017. "The impact of the UK household life-cycle transitions on the electricity and gas usage patterns," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 505-518.
    14. Cansino, José M. & Dugo, Víctor & Gálvez-Ruiz, David & Román-Collado, Rocío, 2023. "What drove electricity consumption in the residential sector during the SARS-CoV-2 confinement? A special focus on university students in southern Spain," Energy, Elsevier, vol. 262(PB).
    15. Sylwia Słupik & Joanna Kos-Łabędowicz & Joanna Trzęsiok, 2021. "Energy-Related Behaviour of Consumers from the Silesia Province (Poland)—Towards a Low-Carbon Economy," Energies, MDPI, vol. 14(8), pages 1-23, April.
    16. Salari, Mahmoud & Javid, Roxana J., 2016. "Residential energy demand in the United States: Analysis using static and dynamic approaches," Energy Policy, Elsevier, vol. 98(C), pages 637-649.
    17. Tilov, Ivan & Weber, Sylvain, 2023. "Heterogeneity in price elasticity of vehicle kilometers traveled: Evidence from micro-level panel data," Energy Economics, Elsevier, vol. 127(PA).
    18. Boogen, Nina & Datta, Souvik & Filippini, Massimo, 2021. "Estimating residential electricity demand: New empirical evidence," Energy Policy, Elsevier, vol. 158(C).
    19. Twerefou, Daniel Kwabena & Abeney, Jacob Opantu, 2020. "Efficiency of household electricity consumption in Ghana," Energy Policy, Elsevier, vol. 144(C).
    20. Dimitra Kotsila & Persefoni Polychronidou, 2021. "Determinants of household electricity consumption in Greece: a statistical analysis," Journal of Innovation and Entrepreneurship, Springer, vol. 10(1), pages 1-20, December.

    More about this item

    Keywords

    Electricity; Determinants; Heterogeneity; Quantile; Subsidies; Surcharges;
    All these keywords.

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ2:2021-06-28. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.