New Delhi: Reiterating his commitment to deliver on the poll promise of electricity for all, Prime Minister Narendra Modi on Monday launched a Rs16,320 crore scheme to fund the cost of last-mile connectivity to households that are still not on the power grid.

The Pradhan Mantri Sahaj Bijli Har Ghar Yojana, or Saubhagya, complements the government’s aggressive village electrification programme, the Deen Dayal Upadhyay Gram Jyoti Yojana launched in July 2015, under which 78% of 18,000 villages have been electrified.

However, last-mile connectivity, the cost of which has to be met by consumers, was proving to be a hurdle in achieving the goal of lighting every household. The goal is to achieve electricity for all by 31 December 2018.

Improving energy consumption, a key development metric, is a priority for the government as it will also help in improving the lives of women.

The Ujjwala Yojana for providing liquefied petroleum gas (LPG) connections to poor households, launched in May 2016, has covered 30 million families so far. Modi also urged state-owned explorer Oil and Natural Gas Corp. Ltd to encourage innovation in electric stoves, which will increase electricity consumption.

Modi’s announcement comes months ahead of crucial assembly elections in both Gujarat and Himachal Pradesh, where the ruling Bharatiya Janata Party is pitted directly against arch-rival Congress. The decision of the government is expected to help financially weaker sections including Dalits and other backward classes.

This decision is also crucial because in 2018, assembly elections are due in the BJP-ruled states of Madhya Pradesh, Chhattisgarh and Rajasthan, as well as Congress-ruled Karnataka.

“This bold move will electorally benefit the NDA in a big way. Consumer information available from databases such as Aadhaar will aid in implementing such welfare schemes in a targeted manner," said Jai Mrug, a Mumbai-based political analyst.

“Every house, whether in village, town or in a remote area, will get electricity. No poor person will have to pay anything for it. Officials will approach villages and offer services," the prime minister said at the launch organized at the new office of ONGC, named after Rashtriya Swayamsevak Sangh ideologue Pandit Deendayal Upadhyaya. Modi said that out of 250 million households in the country, 50 million still have no access to electricity.

Mint first reported about the scheme on 26 July. The scheme will also generate fresh demand for electricity in the country, the lack of which is weighing down the entire power sector.

Kameswara Rao, leader of the energy, utilities and mining practice at PwC India, said last-mile connectivity in electrification has always been a challenge, with households facing high connection costs and states facing higher supply costs.

“This attempt to address both, by funding energy-efficient equipment, is a positive step. This is a natural transition of government policy from electrification of villages to connecting households." said Rao.

Oil minister Dharmendra Pradhan, who was present on the occasion, said the government was committed to improving the lives of every person through schemes such as Ujjwala and Saubhagya and make a “New India by 2022".

Power minister R.K. Singh said the prime minister also wants electricity supply to be uninterrupted and reliable and that the ministry is working on this.

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