The changing impact of rural electrification on Indian agriculture

Abstract

Rural electrification policies in the developing world primarily focus on household power, often at the cost of electricity supply to other productive sectors of the economy. We examine the consequences of this imbalance in rural electrification policy priority on agricultural development in India. Electric pumping of groundwater for irrigation is a major driver of India’s agricultural growth. However, the government of India shifted its rural electrification focus towards universal household electrification starting early 2000s. Using a newly constructed panel-dataset spanning three decades, we find that districts electrifying after the policy change experience much lower gains in electrified groundwater irrigation. On average, electrifying 100 additional rural households is associated with an increase of two additional electrified wells among newly electrified districts – eight times lower compared to 16 electrified wells per 100 electrified households among districts electrified pre-policy change. Our estimates imply that newly electrified districts would have witnessed nearly 20% more irrigated cropland in the dry season if rural electrification policy priorities had not shifted away from agriculture. These results highlight the need to complement household electrification with powering income-generating sectors of the rural economy.