Context
A recent study analyzing the Rajiv Gandhi Grameen Vidyut Yojana (RGGVY) program, which aimed to provide and improve electricity access to roughly 400,000 Indian villages, has revealed that the benefits of rural electrification were not evenly distributed across different village sizes. The study, conducted by researchers from the University of Chicago and the University of Maryland, found that larger, more populous villages benefited disproportionately more than smaller hamlets with fewer households.
The RGGVY Program and Its Impact
- The RGGVY program started in the year 2005 aimed at providing electricity in rural regions of India.
- This work specifically targeted the differential effects that this program has on different sized villages.
- For the study the researchers carried out a sort of ‘natural experiment’ by comparing different villages; those that were just large enough to receive electricity with those that did not qualify for the program and villages before and after receiving the electricity.
Findings: Larger Villages Saw Significant Benefits
According to the study, mechanized electrification had less impact in villages with less than 300 people, somewhat more for villages with around 1000 people. However, the benefits skyrocketed in the villages that had populations of 2000 and above.
- Per-capita Expenditure: Monthly consumer expenditure in villages of approximately 300 people slightly increased post electrification in villages. But in the villages of 2000 plus population, the per capita consumption expenditure doubled because of full electrification cost of about Rs 1428 that is approximately 17 US dollars per month.
- Economic Returns: The researchers determined the economic benefits from electricity access through expansion in consumption, number of industrial outlets and employment opportunities in villages. Using cross-sectional regression and simulation, they concluded that smaller villages of 300 persons had zero return on electrification throughout 20 years and full electrification was less than a 27% probability of yielding positive benefits in excess of the costs. But for 1,000-person villages, they got 1,030 Yuan with a total cost of 13 percent which is just on the margin of cost-inefficiency. However, on average as the village size grew to 2000 people it returned 33% the cost effectiveness index was surpassed. Large villages were 90 percent likely to realise gross incremental costs in relation to the costs of undertaking the projects.
Implications and Recommendations
The study’s findings have important implications for policymakers and development practitioners working on rural electrification projects.
- Cost-effectiveness and Targeted Approaches: On this regard, the researchers opine that extending power extension to the last tier may prove costly and may not easily elevate the rural Satellite villages from the state of poverty. For such places, they advise that there are cheaper technologies that can be deployed in the relevant areas, including small SHS or minigrids while directing the efforts of grid extension to the larger village.
- Addressing Differential Impacts: The findings of the study suggest that rural electrification programmes should take into account the fact that villages differ in their size. Additional efforts and measures could be required in order to involve the beneficial impact of electrification also to the smaller villages and to avoid the emergence of further differentiation between high-populated and low-populated areas.
Conclusion
Therefore, the research on the RGGVY programme has revealed the heterogeneous impact of rural electrification across village size in India. However, such impact was not apparent in small villages to an extent that showed little or no economic gains resulting from electrification. These observations also emphasize the necessity to take into consideration the size of the village and specific approaches to the electrification of such village, so that all types of the villages might receive electricity in equal benefits and in an optimal way that will contribute to the improvement of the results of the programs aimed at the development of the rural areas.
Source: The Hindu