99.5% Villages Electrified, Then Why Are More Than 4 Cr Households Without Electricity?

With a strong objective to supply electricity to all households by December 2018, the government launched Rs 16,320 crore 'Saubhagya Scheme'.

"Rs 16,000 crore will be spent to bring a monumental change in the lives of the poor," said Prime Minister Narendra Modi while launching the scheme yesterday. He expressed regret that even after 70 years of Independence, 40 million out of 172 million families still lacked access to power.

Moving ahead and prepping for the mammoth of the task the scheme envisions, let us take a look at the data. According to latest Central government data, nearly all villages in the country - or 99.5 per cent of them, to be precise, have been electrified. Among the 100% electrified states stand tall- Punjab, Andhra Pradesh, Goa, Kerela and Tamil Nadu.

Now, if 99.5 per cent villages in the country have been deemed "electrified", then why are more than 40 million rural households out of approximately 172 million rural households across 29 states of the country without access to electricity? The argument flashes the discrepancy in the very definition of an 'electrified' village.

According to the government of India's definition- A village would be declared as electrified if-1) Basic infrastructure such as Distribution Transformer and Distribution lines are provided in the inhabited locality as well as the Dalit Basti/ hamlet where it exists. (For electrification through Non-Conventional Energy Sources a Distribution transformer may not be necessary). 2) Electricity is provided to public places like Schools, Panchayat Office, Health Centres, Dispensaries, Community centres etc. and 3) the number of households electrified should be at least 10% of the total number of households in the village.


In other words, despite 90 per cent of households in a village getting no electricity, it is by default considered as fully electrified. The present definition, therefore, does not reflect the true picture of the universal access to electricity status of the country.

As far as the latest scheme is concerned, the launch of 'Saubhagya scheme' does spell the thrust of the government on rural electrification, given the implementation goals.

"If the scheme is implemented in a time-bound manner, it is likely to result in a boost in energy demand, apart from improving the quality of life for rural households. Nonetheless, the demand growth from the relatively high tariff industrial and commercial segments will remain critical for the overall demand growth and viability of discoms. While the energy demand growth in 5M FY2017 has shown some improvement (an increase of 5.4% on y.o.y basis), a sustained demand recovery still remains to be seen." said Sabyasachi Majumdar, Senior Vice President & Group Head, ICRA Ratings.

Global research and brokerage firm CLSA, however, remains defensive on the utility sector, as it believes the implementation of the scheme remains a challenge.

The bigger question is that with the elections in the offing will the government pay heed to this ground fact and bring the necessary changes in the loosely worded 'electrified' definition?