India, like all developing countries, has invested heavily in establishing the basic infrastructure of electricity and water supply for its households. However, as these summer months are demonstrating, the supply of electricity and water remains unreliable. These disruptions can have a serious impact on the social and economic welfare of the poor and, thus, affect economic development, according to several studies.
In a new World Bank study, Marguerite Obolensky and others conducted an extensive review of global studies to show how disruptions to water and power supply, and transport affect households and economies. The researchers find that better quality electricity has a positive impact on household income and consequently, gross domestic product (GDP).
They refer to a 2013 study on household enterprises in India that suggested 16 hours of electricity supply a day boosted the income of these enterprises and was associated with a 0.1% rise in GDP.
When electricity supply is disrupted, the costs can be severe. Households incur costs as their economic activity is hurt and they have to invest in alternative electricity options. In addition, household welfare also decreases as the hours after dusk cannot be spent on productive or recreational activities. At the societal level, the functioning of healthcare facilities and interconnected infrastructure of water supply can be paralysed. The authors estimate that the global cost of electricity outages in 2018 could be as high as $190 billion or 0.15% of global GDP.
Similar effects were found for disruption in water supply and transport. Poor households are affected the most by intermittent water supply. By using alternative, often unsafe, sources of water, they become susceptible to diseases such as diarrhoea and cholera.
In the long run, infrastructure disruptions and unreliable services can even act as disincentives for households to adopt them, which nullifies the benefit of increased access, the authors conclude.
Also read : Infrastructure Disruptions: How Instability Breeds Household Vulnerability
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