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More Power to India : The Challenge of Electricity Distribution

Author

Listed:
  • Sheoli Pargal
  • Sudeshna Ghosh Banerjee

Abstract

This report assesses progress in implementing the government of India's power sector reform agenda and examines the performance of the sector along different dimensions. India has emphasized that an efficient, resilient, and financially robust power sector is essential for growth and poverty reduction. Almost all investment-climate surveys point to poor availability and quality of power as critical constraints to commercial and manufacturing activity and national competitiveness. Further, more than 300 million Indians live without electricity, and those with power must cope with unreliable supply, pointing to huge unsatisfied demand and restricted consumer welfare. This report reviews the evolution of the Indian power sector since the landmark Electricity Act of 2003, with a focus on distribution as key to the performance and viability of the sector. While all three segments of the power sector (generation, transmission, and distribution) are important, revenues originate with the customer at distribution, so subpar performance there hurts the entire value chain. Persistent operational and financial shortcomings in distribution have repeatedly led to central bailouts for the whole sector, even though power is a concurrent subject under the Indian constitution and distribution is almost entirely under state control. Ominously, the recent sharp increase in private investment and market borrowing means power sector difficulties are more likely to spill over to lenders and affect the broader financial sector. Government-initiated reform efforts first focused on the generation and transmission segments, reflecting the urgent need for adding capacity and evacuating it and the complexity of issues to be addressed at the consumer interface. Consequently, distribution improvements have lagged, but it is now clear that they need to be a priority. This report thus analyzes the multiple sources of weakness in distribution and identifies the key challenges to improving performance in the short and medium term. The report is aimed at policy makers and government officials, academics, and civil society in the fields of energy, governance, and infrastructure economics and finance, as well as private investors and lenders in the energy arena.

Suggested Citation

  • Sheoli Pargal & Sudeshna Ghosh Banerjee, 2014. "More Power to India : The Challenge of Electricity Distribution," World Bank Publications - Books, The World Bank Group, number 18726.
  • Handle: RePEc:wbk:wbpubs:18726
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    Citations

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    Cited by:

    1. Ronita Bardhan & Ramit Debnath & Arnab Jana, 2019. "Evolution of sustainable energy policies in India since 1947: A review," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 8(5), September.
    2. Bhatt, Brijesh & Singh, Anoop, 2021. "Power sector reforms and technology adoption in the Indian electricity distribution sector," Energy, Elsevier, vol. 215(PA).
    3. Jamasb, Tooraj & Thakur, Tripta & Bag, Baidyanath, 2018. "Smart electricity distribution networks, business models, and application for developing countries," Energy Policy, Elsevier, vol. 114(C), pages 22-29.
    4. 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.
    5. Kamaljit Singh & Simmi Vashishtha, 2021. "Liquidity infusion under Atmanirbhar Bharat scheme: A strategy to revive Indian power discoms," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 79-89.
    6. Chatterjee, Elizabeth, 2018. "The politics of electricity reform: Evidence from West Bengal, India," World Development, Elsevier, vol. 104(C), pages 128-139.
    7. Singh, Anoop & Jamasb, Tooraj & Nepal, Rabindra & Toman, Michael, 2018. "Electricity cooperation in South Asia: Barriers to cross-border trade," Energy Policy, Elsevier, vol. 120(C), pages 741-748.
    8. 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.
    9. Robin Burgess & Michael Greenstone & Nicholas Ryan & Anant Sudarshan, 2020. "The Consequences of Treating Electricity as a Right," Journal of Economic Perspectives, American Economic Association, vol. 34(1), pages 145-169, Winter.
    10. Sudhir Mahadeo Bobde & Makoto Tanaka, 2020. "Structural Reforms and Technical Efficiency in the Indian Electricity Distribution Sector," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 37(02), pages 1-36, March.
    11. Kathuria, Vinish, 2021. "Impact of institutional reforms on the performance of distribution utilities in India – A dynamic panel data analysis," Energy Policy, Elsevier, vol. 158(C).
    12. Khanna,Ashish & Singh,Daljit & Swain,Ashwini K & Narain,Mudit, 2015. "Transforming electricity governance in India : has India?s power sector regulation enabled consumers? power ?," Policy Research Working Paper Series 7275, The World Bank.
    13. Bhatt, Brijesh & Singh, Anoop, 2020. "Stakeholders’ role in distribution loss reduction technology adoption in the Indian electricity sector: An actor-oriented approach," Energy Policy, Elsevier, vol. 137(C).
    14. Mohammad Abir Shahid Chowdhury & Shuai Chuanmin & Marcela Sokolová & ABM Munibur Rahman & Ahsan Akbar & Zahid Ali & Muhammad Usman, 2021. "Unveiling the Nexus between Access to Electricity, Firm Size and SME’s Performance in Bangladesh: New Evidence Using PSM," Energies, MDPI, vol. 14(20), pages 1-16, October.
    15. Kumar, Shashwat, 2022. "Taking root: Independent Regulatory Agency model of regulation in Indian electricity sector," Energy Policy, Elsevier, vol. 164(C).
    16. Garg, Amit & Naswa, Prakriti & Shukla, P.R., 2015. "Energy infrastructure in India: Profile and risks under climate change," Energy Policy, Elsevier, vol. 81(C), pages 226-238.
    17. Agrawal, Atul & Tripathi, Gireesh Chandra, 2019. "Amendments in Electricity Act 2003: Where the Gap Lies?," Energy Policy, Elsevier, vol. 132(C), pages 797-802.
    18. Criqui, Laure & Zérah, Marie-Hélène, 2015. "Lost in transition? Comparing strategies of electricity companies in Delhi," Energy Policy, Elsevier, vol. 78(C), pages 179-188.

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