Elite Capture : Residential Tariff Subsidies in India
India - home to one of the world's largest populations without electricity access - has set the ambitious goal of achieving universal electrification by 2017. 311 million people, a quarter of its population, remains without power, despite sub...
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Washington, DC: World Bank
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2015/01/20391672/elite-capture-residential-tariff-subsidies-india http://hdl.handle.net/10986/20538 |
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okr-10986-205382021-04-23T14:03:56Z Elite Capture : Residential Tariff Subsidies in India Mayer, Kristy Banerjee, Sudeshna Ghosh Trimble, Chris electricity act energy access poverty line power power sector reform regulators rural tariffs targeting tariffs underpricing India - home to one of the world's largest populations without electricity access - has set the ambitious goal of achieving universal electrification by 2017. 311 million people, a quarter of its population, remains without power, despite substantial efforts to increased affordable access for the poor. This study focuses on India's residential electricity subsidies, as viewed through a poverty lens. Addressing these issues is especially urgent since the residential electricity sector accounts for nearly a quarter of India's total electricity consumption. Comparison of two survey rounds (2004/05 and 2009/10) was used to assess changes in electricity consumption over time. The study approach analyzed subsidy distribution by both below poverty line (BPL) and above poverty line (APL) grouping, as well as income quintile, to allow for the wide variation in poverty rates states. The key findings in this study are that 87 percent of subsidy payments go to APL households instead of to the poor, and over half of subsidy payments are directed to the richest two-fifths of households. Furthermore, these estimates are conservative because they assume that BPL and APL households are accurately identified. Because APL households tend to consume more electricity, subsidies are skewed toward the upper quintiles. The major driver of these outcomes is tariff design. Few states have highly concessional BPL tariffs; in most, all households are eligible for a subsidy on at least a portion of their monthly electricity consumption. Combined with the fact that the poorest households consume relatively small amounts of electricity means that wealthier consumers with electricity access are typically eligible for just as much, if not more, subsidy as poorer ones. India's states have a variety of available options for improving their subsidy performance. Certain states model good practices that other states could consider adopting, for example, Punjab, Sikkim, Chattisgarh, and others. States may consider four model tariff structures that meet the twin, medium-term policy goals of high subsidy targeting and low cost. These are (i) creating BPL tariff schedules and eliminating subsidies from other schedules, (ii) delivering subsidies through cash transfers instead of tariffs, (iii) creating a volume differentiated tariff (VDT), and (iv) creating a lifeline tariff and removing subsidies from other tariffs. 2014-11-18T17:27:05Z 2014-11-18T17:27:05Z 2015 http://documents.worldbank.org/curated/en/2015/01/20391672/elite-capture-residential-tariff-subsidies-india 978-1-4648-0412-0 http://hdl.handle.net/10986/20538 English en_US World Bank Study; CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ Washington, DC: World Bank Publications & Research :: Publication Publications & Research South Asia India |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
electricity act energy access poverty line power power sector reform regulators rural tariffs targeting tariffs underpricing |
| spellingShingle |
electricity act energy access poverty line power power sector reform regulators rural tariffs targeting tariffs underpricing Mayer, Kristy Banerjee, Sudeshna Ghosh Trimble, Chris Elite Capture : Residential Tariff Subsidies in India |
| geographic_facet |
South Asia India |
| relation |
World Bank Study; |
| description |
India - home to one of the world's
largest populations without electricity access - has set the
ambitious goal of achieving universal electrification by
2017. 311 million people, a quarter of its population,
remains without power, despite substantial efforts to
increased affordable access for the poor. This study
focuses on India's residential electricity subsidies,
as viewed through a poverty lens. Addressing these issues
is especially urgent since the residential electricity
sector accounts for nearly a quarter of India's total
electricity consumption. Comparison of two survey rounds
(2004/05 and 2009/10) was used to assess changes in
electricity consumption over time. The study approach
analyzed subsidy distribution by both below poverty line
(BPL) and above poverty line (APL) grouping, as well as
income quintile, to allow for the wide variation in poverty
rates states. The key findings in this study are that 87
percent of subsidy payments go to APL households instead of
to the poor, and over half of subsidy payments are directed
to the richest two-fifths of households. Furthermore, these
estimates are conservative because they assume that BPL and
APL households are accurately identified. Because APL
households tend to consume more electricity, subsidies are
skewed toward the upper quintiles. The major driver of
these outcomes is tariff design. Few states have highly
concessional BPL tariffs; in most, all households are
eligible for a subsidy on at least a portion of their
monthly electricity consumption. Combined with the fact
that the poorest households consume relatively small amounts
of electricity means that wealthier consumers with
electricity access are typically eligible for just as much,
if not more, subsidy as poorer ones. India's states
have a variety of available options for improving their
subsidy performance. Certain states model good practices
that other states could consider adopting, for example,
Punjab, Sikkim, Chattisgarh, and others. States may
consider four model tariff structures that meet the twin,
medium-term policy goals of high subsidy targeting and low
cost. These are (i) creating BPL tariff schedules and
eliminating subsidies from other schedules, (ii) delivering
subsidies through cash transfers instead of tariffs, (iii)
creating a volume differentiated tariff (VDT), and (iv)
creating a lifeline tariff and removing subsidies from other tariffs. |
| format |
Publications & Research :: Publication |
| author |
Mayer, Kristy Banerjee, Sudeshna Ghosh Trimble, Chris |
| author_facet |
Mayer, Kristy Banerjee, Sudeshna Ghosh Trimble, Chris |
| author_sort |
Mayer, Kristy |
| title |
Elite Capture : Residential Tariff Subsidies in India |
| title_short |
Elite Capture : Residential Tariff Subsidies in India |
| title_full |
Elite Capture : Residential Tariff Subsidies in India |
| title_fullStr |
Elite Capture : Residential Tariff Subsidies in India |
| title_full_unstemmed |
Elite Capture : Residential Tariff Subsidies in India |
| title_sort |
elite capture : residential tariff subsidies in india |
| publisher |
Washington, DC: World Bank |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2015/01/20391672/elite-capture-residential-tariff-subsidies-india http://hdl.handle.net/10986/20538 |
| _version_ |
1764445769764438016 |