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AStudyofRuralElectrificationinIndiaChallengesand
Alternatives
ByUshaKumar,ResearchScholar,JJTUniversity

Introduction
Demand for reliable electricity services is significant and this represents a key driver
behindeconomicdevelopmentofthecountryandraisingbasicstandardsofliving.This
is especially applicableto rural India which is home to 70% of the nations population
and over 25% of the worlds poor. Currently only around 55% of households are
electrified (MOSPI 2006). The Expansion of electrification and electricity services are
vitaltoboththeeconomicandsocialdevelopmentofIndia.Howeverthecurrentstate
ofelectricityservicesinmostofthestatesofIndiaindicatesignsofcrisisandarewith
severeshortcomingsinmanyareas:
a)Limitedaccesstoelectricityforruralandurbanpoor
b)Generationcapacityunabletomeetpeakdemand
c) Electric supply Reliability, in terms of predictability of outages and quality of
power.
The supply of electricity across India currently lacks both quality and quantity with an
extensiveshortfallinsupply,apoorrecordforoutages,highlevelsoftransmissionand
distribution(T&D)lossesandanoverallneedforextendedandimprovedinfrastructure
(GoI2006).
The Indian Government recently outlined an ambitious plan for 100% village level
electrification by the end of 2007 and total household electrification by 2012. Indian
Government has initiated a major programme to achieve this, a major programme of
gridextensionandstrengtheningoftheruralelectricityinfrastructurehasbeeninitiated
undertheRajivGandhiGrameenVidyutikaranYojana(RGGVY)(GoI2005).Howeverthe
ambitious grid expansion plans need to be accompanied by similarly ambitious
distribution reforms and depoliticisation of tariffs to deliver the real benefits for the
newly connected rural households. Concerns have been expressed, questioning in
particularthelongtermfinancialandtechnicalsustainabilityoftheprogramme(World
Bank2004).

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ThispaperexploresthevariouschallengesfacedintheprocessofRuralElectrificationin
India. It also highlights the alternatives available including usage of unconventional
energy(RenewableEnergy)towardsdistributedanddecentralisedelectrification.

Objectives
1.ToassessandsummarisethechallengesfacedinRuralElectrificationinIndia
2.Toassessthealternativesforthesameincludingtheuseofnonconventionalenergy
(RenewableEnergy).

ResearchMethodology
Thispaperisaconceptualonewhichisbasedonthedatathatiscollectedfromvarious
sourceslikejournals,magazines,newspapers,websitesandresearcharticlesofscholars.
Furtheritisanalysedaccordingtothedataandfindingsareexplored.

ChallengesfacedinRuralElectrification
a. Incompletecoverage:
Only 86% of the villages have been electrified. However, there has been an 85%
reductionintheoutlayforruralelectrificationintheNinthFiveYearPlanascompared
to the Seventh Plan. The rate of electrification of villages has been steadily declining
aftertheSeventhPlan.Stateagenciesarenotsokeeninmakinginvestmentsinareasof
village electrification and pump set energization. They consider it unremunerative.
Also,withincreasingsubsidies,thereturnsontheinvestmentaffectedtheloanrepaying
capacity of the SEBs. There is not enough focus on this problem and it would take
centuriesatthisratetoachievethestatedruralelectrificationobjectives.
b. Faultydefinition/IncompleteData:
The definition of village electrification as adopted by the Government of India is: "A
village will be deemed to be electrified if electricity is used in the inhabited locality
within the revenue boundary of the village for any purpose whatsoever". Therefore,
electrificationofavillagedoesnotimplythatallthehousesinavillagehaveelectricity.
It is not very clear from the reports scrutinized whether the low level of electrified
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households is because of lack ofpurchasing power or because of lack of grid support.
However,asperthe1991census,only30%oftheruralhouseholdshadelectricity.
c. Lowdemand,lowconsumptionandshiftinfocus:
Thelackoffacilityfordomesticconnectionininitialstages,uncertaintyofpower,load
shedding and rostering schedule on an extensive scale dampened the demand for
power in rural areas. The survey also indicated a very low consumption of electricity,
880kWhperannumperconsumer.Theconsumptionpatternwas64%foragriculture,
14% for industry, 13% for domestic use, 4% for commercial use and 2% for street
lighting.Thelowconsumptioncanprimarilybeattributedtounreliableandpoorquality
ofsupply.
d. Longandcumbersomeprocedures:
Longandcumbersomeproceduresforgettingaconnection,billpayingfacilityandrepair
facilitybeingtoofaroff,weresomeofthefactorsthataffectedacceptability.Ithasalso
been observed that, starting from the electrification of village to the procurement of
connectionforthehousehold,thetimefactorcanvaryfromacoupleofmonthstoafew
years.
e. Financiallyunviable.
Rural India is characterized by small settlements and considering the fact that the
energyrequirementsofthesesettlementsaremuchlowerthancomparedtotheurban
andindustrialcentres,thereishighcostoftransmissionalongwithseveretransmission
anddistributionlosses.Also,whiletheruralsettlementsareincloseclusters,thosein
thehillyandforestregionsarehighlydispersed.Givensuchsparsenatureofdemand,
thecostofprovidingpowertransmissionlinesbecomesveryhigh.
Due to the isolated and scattered nature of most rural areas, difficulties in
transportationofmaterials,equipmentandmachinerywereoftenmetbecauseofthe
lack of accessible road to the remote areas. Also the issues of voltage drop and
unreliabilityindistributionsystemisoftencausedbecauseofthelongdistanceofrural
villagesfromthepowersources.
f. ActiveParticipationbyLocalBodies(nongovernmentalorganizations):
Local Bodies like NGOs, voluntary organisations, village panchayats etc can be very
effective because of their local presence and commitment to rural development, in
catalysing the process of bringing together the government agencies and the rural
people. However, a majority of voluntary agencies and NGOs frequently do not join
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handswiththegovernmentmachinerywithintheframeworkofacommonprogramme.
Withoutasuitablecoordinationmechanism,theworkoftheNGOsisoftenrestrictedto
sporadicdemonstrationprojects,whichmakesalimitedimpactonimprovingruralliving
conditionsthroughsustainableruraldevelopment(http://www.fao.org,10/09/02).
g. Lackofmeasuresforcapacityenhancement:
Electricityisseldomratedhighbytheruralcommunitiesintheirpriorityastheyoften
failtorecognizetheimportanceandthelinkageofenergyinimprovingsubsistenceand
production.
Oneofthefundamentalresponsibilitiesofdecentralizedenergyplanningistofacilitate
and empower the rural people to recognize the importance of energy and its
relationshiptotheirlivesandtheirenvironment.Inthisregard,capacityenhancement
needs to be an integral part of the planning process. The need is to build a cadre of
trained planners, who, in a participatory manner, can assess the needs of the
communityandcandevelopacommunitybasedplanformeetingtheenergyneedsin
anintegratedmanner.Theinadequacyoftrainedmanpowerwithprofessionalskillsin
rural development energy assessment and planning is one of the major hindrances in
decentralized planning. Hence, the planning process needs to allocate funds and
resourcesforestablishingandoperationalizingacomprehensivemechanismfortraining
oftrainers(http://www.fao.org,10/09/02)..
h. OveremphasisongridRuralelectrification
GridconnectionhasremainedthemainapproachtoruralelectrificationinIndia.Indeed
thelatestgovernmentprogrammeforruralelectrificationfocusesinparticularonavast
expansionoftheexistinggridtoreachallvillagesby2012.Moststudiesshowthecostof
deliverytoruralareastobearoundthreetimesgenerationcosts(BarnesandSen2002).
As the distance from the grid increases, the cost of grid connection also rises
considerably.
Overall,therefore,ruralelectrificationhasbeenfinanciallynonviable,hasreachedthe
limits of its success and has become a large financial burden on electric utilities.
However, the policy makers in the country have, over the years, considered that
electric supply from the grid as asymbol of progress and consequently have laidover
emphasis on it in the planning process. In this regard, the policymakers have largely
been influenced by the success of rural electrification programmes in the developed
world.Incontrasttothedevelopedcountries,inadevelopingcountrylikeIndia,withits
large rural population and the much higher levels of poverty, the provision of grid
electricityiseconomicallyunviable.
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AlternativeEnergySources:RenewableEnergy
Renewable Energy Sources need to be considered as a strong alternative for rural
electrification schemes. They typically combine centralised grid connections as
distribution franchises and DDG operated at the local level taking advantage of
renewableenergytechnologies.
Theuseofrenewablescanavoidfueltransportorgridinterconnectiontoremoteareas,
harvestfrequentlygoodresourcepotentialsandtapintoruralcommunitieswillingness
topay.Thescalabilityofmanyrenewabletechnologiesallowsforagradualincreaseof
electricityservicesprovidedinlinewiththepurchasingpowerofthecommunities,and
thus avoids the dilemma of past rural electrification projects which first deliver
electricityasafreeorhighlysubsidisedgoodandthussubsequentlyfailtoimplement
effectivechargingschemestosecurethecontinuationofpowersupply.
Future energy demands and supply are subjected to numerous uncertainties, most of
which are difficult to predict. Such as energy prices, global economic growth rate,
demographic changes, technological advances, government policies and consumer
behaviour. In such a complex market, energy projections are based on historical
information. Since the availability of fossil fuel is on the decline therefore the
unconventionalorrenewablesourcesofenergyhastobegivenimportance.
MainRenewablesourcesofEnergyare:
SolarPower
India has huge untapped solar off grid opportunities, given its ability to provide
energytovastuntappedremoteruralareas,thescopeofprovidingbackuppowerto
celltowersandithasinherentpotentialtoreplacefossilfuels.Indiaislocatedinthe
equatorialsunbeltoftheearthreceivingabundantradiantenergyfromthesun.In
most part of India, clear sunny weather is experienced about 250 to 300 days per
year.
Solar energy is ideally suited for providing power to those areas not having power
linesconnectingit.LargepartsofIndiadonothaveelectricitygridconnectivityandit
ischeapertopowerthemthroughsolarenergyratherthanextendingpowerlines.
WindPower

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Windenergylikesolarenergyisafreeenergyresource.Butitismuchintermittent
than solar. Wind speeds may vary within minutes and effect the power generation
andincasesofhighspeedsmayresultinoverloadingofthegenerator.Energyfrom
thewindcanbetappedusingturbines.
The total cost can be cheaper than Solar systems but more expensive than Hydro.
However, electricity production depends on wind speed, location, season and air
temperature. Hence various monitoring systems are required and most cost
expensive.
HydroPower
Hydropower is a renewable, nonpolluting and environmentally benign source of
energy. It is perhaps the oldest renewable energy technique known to mankind fo
mechanical energy conversion as well as electricity generation. It represents use of
waterresourcetowardsinitiationoffreeenergy.Outofthetotalpowergeneration
capacityinthecountry,Hydropowercontributesabout25%(January2011).
WindHybrid
Wind power represents one of the most widespread and commercially viable
renewable energy generation technologies, gaining significant levels of deployment
across both the developing and industrialised world. Most of the wind energy
deployment is grid connected. Due to supply variations it is less suited to offgrid
standalonegeneration.However,whenconsideredpartofahybridsystem,alongside
diesel, biomass or solar generation, wind turbines can be economically appealing.
Decreasingcapitalcostsaswellasgovernmentincentivesstrengthentheviabilityof
windhybridsystems.Howeverdifficultiesinsitingofturbines,combinedwithoften
undocumented local windspeed variations, make effective deployment time and
informationintensive,reducingitssuitabilityeveninhybridconfigurationforsmall
scaleapplications.
Biofuel/Alternativefuel
TheelectricpowerdemandinmostIndianvillagesliesbetween20kw100kwandthe
locally available surplus biomass is often sufficient to meet these power
requirements (Bharadwaj and Tongia 2003). Widespread availability of agriculture
wastage, fuelwood, animal dung and wasteland make biofuel and biomass based
energyappealing,withbiomassgasificationrepresentingoneofthemostpromising
smallscale electricity generating technologies. The use of biomass gasification

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technology for rural electrification still remains limited, though with large potential
acrossIndia(Kishoreetal.2004;Ravindranathetal.2005).
For smallscale electrification, particularly community loads in rural areas, biomass
gasificationrepresentasustainableandrelativelylowcostoptionforfulfillingbasic
electricityneeds.
Whilepolicyandbudgetarysupportforrenewableenergyhaveprogressivelyincreased
overtheyears,particularlyforlargescalegridconnectedpower,therecontinuetoexist
manybarriersthathinderupscalingofrenewableenergydeployment

Recommendation
a. IncreasingpromotionofuseofRenewableEnergySources
Renewableenergyiscurrentlyexperiencingincreasingvibrancyacrossallsectorsofthe
economydrivenbysustainedeconomicgrowthandgrowingglobalconcernsregarding
climate change. There are various stakeholders that directly/indirectly contribute
towards the promotion of renewable energy, and each one has some aspirations and
expectations from this sector, just as they have a significant responsibility. This is in a
way laying foundation of a new economy that is inclusive, sustainable and aspires for
decarbonisationofenergyinadefinitetimeframe.However,thereisalongwaytogo.
Inordertocreateanenablingenvironment,theMinistryasapolicymakerwillhavea
significantcontributiontomake.
Renewablesstruggletocompeteingenerationcosttermsatsubsidizedtariffratesfor
grid electrification (Banerjee 2006; Nouni et al. 2007). However, where full cost of
energydeliveryistakenintoaccountforservingruralareaswithgridpower,renewables
areoftencostcompetitive.
b. Setupeffectiveinstitutionstodealwithproblems.
Most successful programs have a specialized institution that deals with and promotes
rural electrification. The exact nature of institutional structure does not appear to be
critical,asavarietyofapproacheshavebeensuccessful.Theyincludeaseparaterural
electrificationauthority(Bangladesh);settingupruralelectriccooperatives(CostaRica);
allocatingruralelectrificationtoanewdepartmentinthenationaldistributioncompany
(Thailand);ordelegatingittoaspecializedofficewithintheutility(Tunisia).However,
there mustbe a high degree of operating autonomy so the implementing agency can
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pursue rural electrification as its primary objective without significant political
constraints.
c. Governmentcommitmentanddealingwiththepoliticaldimension.
Allruralelectrificationprogramshavesubsidiesforthecapitalcostsofexpansion.This
use of public funds for rural electrification often leads to political interference at
nationalandlocallevels. Thepoliticiansregardpublicfundingas givingthemrightsto
interfere, but experience shows that this can be quite damaging. Once technical and
financialdecisionmakingisunderminedintheimplementingagencybecauseofpolitical
string pulling, organizational goals are undermined. However, sometimes political
pressurecanbeturnedintoapositiveforceasinThailandwherelocalpoliticianswere
encourage to raise and contribute funds, so that their constituents could receive
electricitybeforetheplannedtime.
d. Establishmentofclearplanningcriteriaforruralelectrification.
Grid rural electrification is often a step by step process which starts with the most
promisinghighpopulationgrowthareasandthenmovesontomoreandmoreremote
populations. Successful rural electrification programs have all developed their own
system for ranking or prioritizing areas for rolling out the electricity supply. Capital
investmentcosts,leveloflocalcontributions,anddensityofconsumer,areamongthe
factors normally taken into account. In Costa Rica, the ranking of communities was
based on their population density, level of commercial development, and potential
electricityconsumption.
e. Subsidesforgridexpansioncapitalcosts.
Inmostsuccessfulprograms,asubstantialproportionofthecapitalhasbeenobtained
atdiscountedinterestratesorfromoutrightgrants.TheprograminCostaRicastarted
with low interest rate loans. In Tunisia, all capital expansion costs were covered by
governmentgrants.Havingaccesstosuchlowcostfinancingandsubsidiesneedhaveno
illeffects on the implementing agency or the rural electrification program. But such
loans and grants should never be provided to companies that are not covering their
operatingandmaintenancecoststhroughrevenuecollection.Thiswillonlyworsentheir
financialpositionthatultimatelyresultsinpoorcustomerservice.
f. Chargingtherightpriceforelectricity.
All the successful programs reviewed in the case studies placed a strong emphasis on
coveringtheiroperatingcoststhroughrevenuecollection.Costrecoveryisessentialfor
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the longterm effectiveness of rural electrification programs. When cost recovery is
pursued, many of the other program elements can fall into place. Rural electrification
prices set at realistic levels sometimes even leads to energy costs savings for new
customersastheyreducetheirkerosenelightingcosts.Chargingtherightpriceallows
the electricity company to provide an electricity supply in an effective, reliable, and
sustainablemannertoanincreasingnumberofsatisfiedconsumers.
g. Loweringthebarrierstoobtainingasupply.
Theinitialconnectionchargesdemandedbythepowerdistributioncompaniesfornew
customersareoftenasignificantbarriertotheadoptionofelectricitybyruralfamilies.
They often are even more important than the monthly electricity bill. Reducing these
connectionscharges,orspreadingthemoveraseveralyears,evenifitmeanscharging
moreperkilowatthourofelectricity,allowslargernumbersoflowincomeruralfamilies
toobtainasupply.
h. Benefitsofcommunityinvolvement.
Traditional thinking in many utilities is often oblivious to the importance of local
community involvement. Rural electrification is seen simply as a technical matter of
stringing lines to grateful consumers. The case studies show clearly that rural
electrificationprogramscanbenefitgreatlyfromtheinvolvementoflocalcommunities
or suffer because of its absence. There are many innovative ways to do this. In
Bangladesh consumer meetings were held before the arrival of the electricity supply,
helpingtoavoidcostlyandtimeconsumingdisputesoverrightsofwayandconstruction
damage.InThailandcommunitycontributionsincashorinkindwereoftenthedecisive
factorinbringingareaswithinthescopeoftheruralelectrificationprogram.
i. Reducingconstructionandoperatingcosts.
Therearemajoropportunitiesforthereductionofconstructionandoperatingcostsof
ruralelectrificationinmostcountries.Wherethemainuseofelectricityisexpectedto
beforlightsandsmallappliances,thedesignstandardscanbesimplifiedandadapted
for the same. This can contribute significantly to the growth of rural electrification
coverage.
j. ReducingTransmissionandDistribution(T&D)losses
Transmission and Distribution losses in India have risen from 25% in 19971998 to
around33%in20032004.IncountriessuchasChina,Malaysia,andThailand,theyare
less than 10%. The State Electricity Boards (SEBs) that bear primary responsibility for
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distributionfaceirregularitiesinbillingandrampanttheftofelectricity.Itisestimated
thatofthetotalpowergenerated,onlyabout55%isbilled,andaround41%isrealized.
Cost recovery has declined from 82% in 19921993 to 69% in 20012002. While just
abouteveryoneagreesontheendpoint,(restoringthefinancialhealthoftheSEBsand
powerutilities,increasinggenerationcapacity,andloweringT&Dlosses)howtotread
thenarrowanddifficultpoliticalpathtoachievingthatgoalremainsachallenge.

CONCLUSION
Indias economic growth has been substantial and sustained over the year and this is
placing enormous demands on its energy resources. This has created a demand and
supply imbalance and requires a serious effort from the part of the Government to
augmentitsenergysupplies.
Indiaisalreadyimportingmorethan75%ofitsoilandthereisagrowingthreatofthis
increasing further. Also there is a significant risk of lesser thermal capacity being
installedonaccountoflackofindigenouscoalinthecomingyears.Thediscoveryofgas
reservesandproductioninrecentyearsislikelytomitigatethepowerneedsonlytoa
verylimitedextent.
Indiaisthereforefacingseverenergysupplyconstraints.Alsohugequantitiesofdiesel
andfurnaceoilsarebeingusedbyallsectorse.g.industrial,commercial,institutionalor
residential. This usage is being subsidized and thus leading to enormous costs for the
government.Ontheotherside,wehavealargeproportionofcitizenswhocontinueto
live without even having any access to electricity or any other form of commercial
energy.Othershavetodowitherraticavailabilityofelectricity.
TheTraditionalmeansofenergysupplyarefallingshortduetotheseconstraintsfaced
inresourceavailabilityandindeliverymechanisms.Thisconditionislikelytopersistin
the foreseeable futureas well andenergy availability andaccess will continue to be a
problem.
Insuchascenario,acceleratingtheuseofrenewableenergyisalsoindispensableifIndia
needs to not only add new capacity but also increase energy security, address
environmental concerns as well and lead the market for renewable energy. It is also
indispensable from the perspective of meeting its commitments to reduce carbon
intensity. The Power sector contributes to almost half of its carbon emissions.
Renewable Energy is no longer alternate energy, but will increasingly become a key
partofthesolutiontoIndiasenergyneeds.
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