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Free Power, Irrigation and Groundwater Depletion: Impact of the Farm Electricity Policy of Punjab, India

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  • Disha Gupta

    (Department of Economics, Delhi School of Economics)

Abstract

This paper provides causal evidence of the impact of a change in the policy regime from flat rate to free farm electricity pricing, introduced in Punjab, India in February 1997 using a difference-in-differences framework. Based on village-level data from the second and the third rounds of the Minor Irrigation Census, the study finds a differential increase in the number of electric-operated tubewells and horsepower load of pumps in Punjab as compared to an agriculturally-similar and neighbouring state, Haryana, which is taken as the control group. Through these channels, the study finds that percentage deviation in groundwater depth from its mean in the baseline period increased by 16 per cent more in Punjab. Nationally-representative well-level data on groundwater depths from Central Ground Water Board shows impact heterogeneity with sharper effect on groundwater depth for wells that are lying closer to the cut-off of about 10 meters where a technological shift from centrifugal to submersible is required to maintain access to groundwater pumping. Key Words: Water Pricing, Power Subsidies, Groundwater Depletion, Irrigation,Agriculture JEL Codes: O13, Q18, Q25, Q48

Suggested Citation

  • Disha Gupta, 2021. "Free Power, Irrigation and Groundwater Depletion: Impact of the Farm Electricity Policy of Punjab, India," Working papers 316, Centre for Development Economics, Delhi School of Economics.
    • Handle: RePEc:cde:cdewps:316
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    More about this item

    Keywords

    water pricing; power subsidies; groundwater depletion; irrigation; agriculture jel codes: o13; q18; q25; q48;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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