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Effect of Electricity Act on tariff gap within the subsidizing sector: The case of India

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  • Jain, Ritika
  • Nandan, Amit

Abstract

The current study examines the effect of a set of Electricity Act, adopted by India in 2003, on the price gap between two specific consumer groups-industrial and commercial. Paying a higher tariff than the other consumer groups, these two groups have been referred to as the ‘subsidizing’ groups of consumers in the Indian context. While the effect of reforms between the ‘subsidizing; ’ and subsidized’ groups has received attention, research on the effect of reforms on the tariff gap within the ‘subsidizing’ sector has been under-addressed. Using data on all major states of the country spanning from 2004-2014, the study uses a graphical exposition, excerpts of policy document and panel econometric modelling technique. The study focuses on six aspects of the policy and emphasizes on adoption and implementation extent and finds that mere policy adoption has no strong effect on tariff gap. Instead, effective implementation may be beneficial in narrowing the tariff gap within the subsidizing sectors as well. Specifically, unbundling of the electricity sector into three different segments and establishment of an independent regulatory authority in the state may lead to narrowing tariff gap if implemented effectively.

Suggested Citation

  • Jain, Ritika & Nandan, Amit, 2019. "Effect of Electricity Act on tariff gap within the subsidizing sector: The case of India," Energy Policy, Elsevier, vol. 132(C), pages 901-914.
    • Handle: RePEc:eee:enepol:v:132:y:2019:i:c:p:901-914
    DOI: 10.1016/j.enpol.2019.06.037
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    References listed on IDEAS

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    Cited by:

    1. Jain, Ritika & Nandan, Amit, 2020. "Electricity prices and firms' decisions and outcomes: The case of India after a decade of the Electricity Act," Energy Economics, Elsevier, vol. 91(C).
    2. Ordonez, Jose Antonio & Jakob, Michael & Steckel, Jan Christoph & Ward, Hauke, 2023. "India's just energy transition: Political economy challenges across states and regions," Energy Policy, Elsevier, vol. 179(C).
    3. Sufia, & Singh, Anoop & Mishra, Shambhavi, 2025. "Operational efficiency and service quality of Indian electricity distribution utilities: A three-stage DEA and Malmquist Index analysis," Utilities Policy, Elsevier, vol. 96(C).
    4. Sarangi, Gopal K. & Pradhan, Abhilas Kumar & Taghizadeh-Hesary, Farhad, 2021. "Performance assessment of state-owned electricity distribution utilities in India," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 516-531.
    5. Patyal, Vishal Singh & Kumar, Ravi & Lamba, Kuldeep & Maheshwari, Sunil, 2023. "Performance evaluation of Indian electricity distribution companies: An integrated DEA-IRP-TOPSIS approach," Energy Economics, Elsevier, vol. 124(C).
    6. Sedai, Ashish Kumar & Vasudevan, Ramaa & Pena, Anita Alves & Miller, Ray, 2021. "Does reliable electrification reduce gender differences? Evidence from India," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 580-601.
    7. Xie, Li & Huang, Zhisheng, 2025. "Electricity price cross-subsidies and enterprises’ green total factor productivity: Empirical evidence from Chinese industrial listed enterprises," Journal of Asian Economics, Elsevier, vol. 96(C).
    8. Mehta, Tarun & Sarangi, Gopal K., 2022. "Is the electricity cross-subsidization policy in India caught between a rock and a hard place? An empirical investigation," Energy Policy, Elsevier, vol. 169(C).
    9. Rounak Sil & Tirtha Chatterjee & Ritika Jain, 2023. "Altruistic Preference and Crime Perception," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 166(2), pages 339-364, April.
    10. Verma, Mandhir Kumar & Mukherjee, V. & Kumar Yadav, Vinod & Ghosh, Santosh, 2020. "Indian power distribution sector reforms: A critical review," Energy Policy, Elsevier, vol. 144(C).

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    Keywords

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    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • P41 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Planning, Coordination, and Reform

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