Opinion | Electricity key to a nation’s development3 min read . Updated: 30 Dec 2019, 12:15 AM IST
The success of the electricity access programme will ultimately fall on discoms
In the 1980s, in the western Odisha town of Balangir, where I grew up, less than 10% households in the district (by the same name) had electricity access. Even as I started working as a consultant in Odisha’s power sector reform project in the 1990s, less than 30% households were electrified in the eastern Indian states of Bihar, Assam, West Bengal and Odisha.
So, when Mint first reported this seemingly innocuous news on 28 April 2018, I was overwhelmed. “All Indian villages will now have access to electricity. The last village to be brought on the national power grid was Leisang village of Manipur at 5.30pm today," said the news report.
A seminal moment in the journey of independent India, the significance of this achievement was not lost on anyone. Prime Minister Narendra Modi tweeted this as a major milestone in the economic journey of the nation.
Modern energy access, particularly to electricity, is crucial to a country’s development journey. In fact, surviving without electricity in our modern lives is incomprehensible as lighting, water, sanitation, entertainment, education, healthcare, mobile charging —everything depends on electricity. And with the future of mobility moving towards electricity makes it ubiquitous, as clichéd as that sounds.
The Sustainable Development Goals were set in 2015 by the United Nations General Assembly and intended to be achieved by 2030. SDG 7 aims to “ensure access to affordable, reliable, and modern energy for all by 2030, including universal access to electricity and clean cooking, a greater share of renewables in the energy mix, and a doubling of the rate of improvement of energy efficiency".
The government of India is committed to universal electricity coverage, recognizing its many benefits to households and its impact on health, education, and overall economic well-being. The focus on electrification in its national policies, and the allocated substantial resources to increasing electricity access, is evident. Given its large population without electricity access, India’s achievement will contribute greatly to achieving the UN’s SDG7 by 2030.
The Indian government considers a village to be electrified if basic infrastructure, such as schools, and at least 10% of households are connected to the grid. After the Mint report, the definition was debated. Electricity access provided to households through on-grid, mini-grids, and off-grid systems led to confusion. The government termed the debate as meaningless, while reiterating the country’s attempt at 100% households electrified through the ‘Pradhan Mantri Sahaj Bijli Har Ghar Yojana’- Saubhagya.
Being an argumentative nation, we can go on forever on what the definition is. But what we cannot ignore is that energy access, which was at the core of economic policy, has indeed been achieved at the first level.
Now the focus must shift to providing reliable, affordable and quality service to households with electricity. Under the current programme, the government provides capital for new investments in rural networks, but has little to offer to the states to maintain quality supply or access to affordable electricity to the poor. Providing both access and service reliability is key to increasing India’s electricity adoption rate.
Currently, distribution companies tend to under-invest in rural electrification, as it generates insufficient revenue. This leads to unreliable supply. Thus, subsidies or incentives to build lines must include appropriate investments for maintenance.
The success of the electricity access programme will ultimately fall on the state electricity distribution companies, or discoms. The incentive to serve the newly added rural consumers is low owing to low electricity prices and lack of subsidies for operation and maintenance. These companies are also struggling financially due to lack of cost-reflective tariffs and operational inefficiencies. Despite Ujwal DISCOM Assurance Yojana (UDAY) to reduce financial stress, these companies are still not out of woods and, in some cases, their finances have deteriorated. There are no easy answers, but the country needs to find one soon.
Debasish Mishra leads the energy, resources and industrial product industry for Deloitte in India. Views are personal.