Universal Access to Electricity in India: Is this an Evolutionary or Revolutionary Outcome? Part I (1947-1975)

Lydia Powell and Akhilesh Sati, Observer Research Foundation

Nearly all households in India (over 99 percent) were reported to have access to electricity in 2019.[1] Is this a revolutionary achievement or the end of an evolutionary process?

Source: Plan documents (various issues) and NSSO data

Note: The figures in black boxes show the share (in percent) of budgetary outlay for power sector spent on rural electrification; the grey boxes give a selection of dedicated plans for rural electrification. The green line represents village electrification (left axis) and the red line represents household electrification (right axis). The steeper slope for village electrification shows faster rates for village electrification than for household electrification.

The policy to extend electricity access to all households was part of Indian energy policy making for over seventy years. At the time of independence (1947) electricity generation and distribution were primarily in the hands of the private sector. Private companies and their franchisees focussed on urban and industrial demand which gave them a reasonable return on investment. Rural and agricultural sectors were ignored as they were seen as unprofitable. Only one in 200 villages were electrified and just 3 per cent of the population in six large towns consumed over 56 per cent of utility electricity. Over 506 of 856 towns with more than 10,000 people was not electrified. The per person electricity consumption was 14 kWh per year and in many states the per-person consumption was as low as 1 kWh per year.[2] In the late 1940s and 50s correcting this anomaly was one the key mandates of the planning commission, an extra constitutional body set up to ensure the constitutional right to adequate means of livelihood to all citizens.  In the words of the planning commission (quoted in the first five year plan) the ‘society must develop rather than passively evolve’.

Since then all of the planning commission’s five year plans proposed ways and means to generate and distribute electricity more evenly. The first five year plan (1951-56) documented inequitable access to electricity and recommended the continuation of programmes for increasing energy access initiated under the post-war development schemes.[3] The second five year plan (1956-61) sought to increase electricity availability in rural areas for employment growth and improvement of living standards.[4] One of the significant recommendations in this plan document was to increase coal based power generation to push universal access to electricity. This made rational sense as only 10 percent of coal resources in the country were utilised for power generation at that time. Reflecting this sentiment Mahalanobis, the father of Indian planning observed that the ultimate objective of planning was to improve the level of living for all the people of the country through efficient exploitation of its resources (such as coal).[5]

Despite these initiatives, less than 0.5 percent of the villages were electrified at the end of the second plan.[6] A significant improvement in planning and implementation of electricity access programmes was introduced in the third five year plan (1961-66) that called for district level planning for electricity demand projection, development of interconnected grids at the state, zone and national level.[7] However the motivation for the change in tempo of policy implementation was not necessarily lighting up rural huts but rather the strategic goal of achieving food security. This period marked widespread famine and food shortages in India which introduced what is now known as the ‘green revolution’ to increase food production.[8] The green revolution depended on hybrid seed varieties, intensive fertiliser and water use to increase the productivity of agriculture. This made increasing electricity access to villages for pumping groundwater a strategic goal of the federal government.

India’s anxiety over food security was not new.  India with 82 percent of the population of undivided British India got only half the canal system carrying 400,000 cusecs[9] of water and less than half of 24 million acres of land irrigated by state owned canals.[10] The first plan cited this data to emphasise the need to double the area under irrigation by the 1960s through the provision of cheap electricity that would pump water from tanks and wells. In this period, 2000 tube wells were used for irrigation in Utter Pradesh and more than 12,500 in Madras (now Tamil Nadu) two states that had access to electricity from hydro power projects. 20,000 applications for new tube well connections were on the waiting list in Madras on account of inadequate power availability.  Famine and food shortages in the 1960s justified their case for increasing pumping ground water. In this environment when the overwhelming concern was food security, it is no surprise that the subject of power (as in electric power) was primarily discussed in the context of irrigation under a chapter titled “Irrigation and Power” in the plan documents until the oil crises of the 1970s that introduced other dimensions to energy policy making.

During the first and second plan periods, the budget allocation for rural electrification was about 9-10 percent of the total budget outlay for the power sector but this jumped to roughly 30 percent by the third plan period (refer to chart).[11] This increase in spending dramatically increased ‘village electrification’ (defined broadly as the existence of a grid connected electric pole in a village) but this did not necessarily translate into electrification of rural households. One of less noted negative consequences of the shift towards the strategic goal of ‘energising pump sets’ (term widely used in plan documents) was the deterioration of State Electricity Board’s (SEBs) finances. SEBs were responsible for distributing electricity and also for generating and transmitting electricity at the state (regional governments). The fourth five year plan (1969-74) that followed annual plans that replaced for five year plans during the war (with China and later with Pakistan) expressed concern over power generation capacity falling behind targets and the deteriorating state of SEB finances.[12] Despite these early warnings over SEB finances and a number of plans and proposals to correct it, SEB finances remain in a precarious state even today (2019).[13] Since the 1970s the subject of SEB operations has occupied a whole industry of academic and analytical experts from around the world. Most of the studies by these experts looked at the issue through a neo-liberal market lens and concluded that SEBs were inefficient entities that had to be deregulated, unbundled and privatised to improve efficiency.[14] Among the very few alternative political economy views was one that argued that SEBs were not inefficient enterprises but administrations whose nature was to pursue objectives  that were heterogeneous (increasing electricity access and improving food security for example) and so, irreconcilable to judgement by sole economic criteria.[15]  Highlighting the development externalities created by electricity networks at the macro-level, the study noted that SEBs managed to achieve not only reasonable level of village electrification but also facilitated development in agriculture through the green revolution.

to be continued…….

Views are those of the authors 

Contact: indiaenergyinsights@gmail.com

[1] https://saubhagya.gov.in/

[2] Planning Commission, 1951. First Five Year Plan. New Delhi: Government of India

[3] Maulik, T K, 1986. Energy and Development Options: The Case of India. Working Paper No 622, Ahmedabad: Indian Institute of Management

[4] Planning Commission, 1951. First Five Year Plan. New Delhi: Government of India

[5] Mahalanobis, P C, 1964. Statistical Tools and Techniques in Perspective Planning in India, Sankhya: The Indian Journal of Statistics: 26, No ½ Series B (1960-2002), 29-44

[6] Central Electricity Authority, 2018. Growth of the Electricity Sector in India from 1947-2018 (total number of villages in India taken as 600,000)

[7] Planning Commission, 1961. Third Five Year Plan, New Delhi, Government of India

[8] Bhatia, B. M, 1967.Famines in India: A Study in Some Aspects of the Economic History of India (1860–1965). Asia Publishing House, Bombay

[9] Cubic feet per second roughly just over 28 liters per second

[10] Planning Commission, 1951. First Five Year Plan. New Delhi: Government of India

[11]  Budget allocation calculated from various plan documents

[12] Planning Commission, 1969. Fourth Five Year Plan. New Delhi, Government of India

[13] Niti Aayog, 2019. Diagnostic Study of the Power Distributiion Sector, Final Report, Crisil, Infrastructure Advisory, (April), https://niti.gov.in/sites/default/files/2019-08/Final%20Report%20of%20the%20Research%20Study%20on%20Diagnostic%20Study%20for%20power%20Distribution_CRISIL_Mumbai.pdf

[14] Salgo, H, 1998. Power Sector Reform and the Privatisation of Distribution in India. International Working Document, World Bank

[15] Ruet, Joel, 2005. Privatising Power Cuts: Ownership and Reform of State Electricity Boards in India. Edited by P D Kausik. New Delhi: Academic Foundation