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Business News/ News / India/  Should access to electricity  be  a  basic right?
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Should access to electricity  be  a  basic right?

When electricity is seen as a universal right, fewer people get reliable connections, finds new study

(Photo: Pradeep Gaur/Mint)Premium
(Photo: Pradeep Gaur/Mint)

Mumbai: Ever since its roll-out in 2017, the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya scheme) has been plagued with problems of poor quality service. According to new research, this could be a direct consequence of viewing free electricity as a universal right.

In the study, economist Robin Burgess and co-authors argue that people tend to stop making payments, and even steal electricity when it is seen as an entitlement.

Unpaid bills and illegal connections trigger a vicious cycle where the loss to electricity distribution companies (discoms) leads to rationing of power. Fewer people are then willing to pay for uneven power supply, and this aggravates discom losses.

Using data from 172 feeders in Bihar’s electricity grid as a case study, the authors highlight three inefficiencies. First, when power supply is rationed, all consumers receive less than 24 hours of supply per day.

Second, the average revenue rate for utilities settles at a low of 38% in such a market. And third, regions which pay the entire electricity cost get less of the service than non-paying regions. The authors estimate that revenues of Bihar’s power utilities fall short of covering their costs even after all subsidy support and leakages are accounted for. Bihar’s example is not atypical. The authors show that across the world, developing countries that attempt to raise access to power tend to end up with high transmission and distribution losses as the share of unregistered users grow.

In contrast, when payment norms are enforced with an increase in access to electricity in richer countries, the losses decline. Developing nations could reduce losses if they stop treating power as a “right", and instead treat it as a private good, the authors say.

Also read: The Consequences of Treating Electricity as a Right

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Published: 17 Mar 2020, 10:04 PM IST
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