Recently, the central government launched the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (or Saubhagya).[i],[ii]
The scheme seeks to ensure universal household electrification (in
both rural and urban areas) by providing last mile connectivity. The
scheme is expected to cover three crore households. Note that currently
about four crore households are un-electrified. A rural
electrification scheme has also been under implementation since 2005.
In light of this, we discuss the current situation of, and key issues
related to rural electrification in the country.
Regulatory and policy framework
the Electricity Act, 2003, the central and state governments have the
joint responsibility of providing electricity to rural areas. The 2003
Act also mandates that the central government should, in consultation
with the state governments, provide for a national policy on (i)
stand-alone power systems for rural areas (systems that are not
connected to the electricity grid), and (ii) electrification and local
distribution in rural areas. Consequently, the Rural Electrification
Policy was notified in August 2006.[iii]
Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), launched in 2005, was
the first scheme on rural electrification. In December 2014, Ministry
of Power launched the Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY),
which subsumed the RGGVY.[iv]
Components of DDUGJY include: (i) separation of agricultural and
non-agricultural electricity feeders to improve supply for consumers in
rural areas, (ii) improving sub-transmission and distribution
infrastructure in rural areas, and (iii) rural electrification by
carrying forward targets specified under the RGGVY.
financial outlay for DDUGJY over the implementation period (until
2021-22) is Rs 82,300 crore which includes budgetary support of Rs
68,900 crore. The central government provides 60% of the project cost
as grant, the state power distribution companies (discoms) raise 10% of
the funds, and 30% is borrowed from financial institutions and banks.
Status of rural electrification
of August 2017, about 1% of the villages in India remain un-electrified
(3,146 villages). However, with regard to households, around 23% (4.1
crore households) are yet to be electrified. Table 1 at the end of this
post shows the status of rural electrification across all states.
Issues with rural electrification
Definition of an electrified village
electrified village is defined as one that has the following: (i)
provision of basic infrastructure such as distribution transformers and
lines in the inhabited locality, (ii) provision of electricity in public
places like schools, panchayat office, health centers, dispensaries,
and community centers, and (iii) at least 10% of the total number of
households in the village are electrified.[iv]
a village is considered to be electrified if 10% of the total number of
households in the village have been electrified. This is apart from
the basic infrastructure and electrification of certain public centers
in the village. The Standing Committee on Energy (2013) had observed
that according to this definition, a village would be called electrified
even if up to 90% of households in it do not have an electricity
It also noted that the infrastructure being provided under the scheme
is highly inadequate, unreliable and unsustainable. The Committee
recommended that the actual electrification requirement of villages must
be assessed, and it should be ensured that the state discoms provide
electricity to the remaining households in the village.
Supply of electricity
Standing Committee had also noted that while the rural electrification
scheme looks at creating infrastructure, the actual supply of
electricity to households rests with the state discoms.[v]
These discoms are already facing huge financial losses and hence are
unable to supply electricity to the villages. Discoms continue to
supply subsidised power to agricultural and residential consumers,
resulting in revenue losses. Further, the average technical and
commercial losses (theft and pilferage of electricity) (AT&C losses)
are at around 25%. While the Ujjwal Discom Assurance Yojana (UDAY) has
eased off some of the financial losses of the discoms, it remains to be
seen whether discoms are able to reduce the cost-tariff gap and
AT&C losses in the future.
It has been recommended that
generation capacity should be augmented so that states can meet the
additional demand under the rural electrification schemes. Further, the
assistance to financially weaker states should be increased so that they
can better implement the scheme.[v]
Electricity to below poverty line (BPL) households
the rural electrification scheme, the cost for providing free
electricity connection per BPL household is Rs 3,000. It has been
observed that this cost per household may be inadequate.[v]
Due to the low cost, the quantity and the quality of work has been
getting compromised leading to poor implementation of the scheme. It
has been recommended that the Ministry should revisit the cost provided
under the scheme.[v]
The new electrification scheme: Pradhan Mantri Sahaj Bijli Har Ghar Yojana (or Saubhagya)
new scheme, Saubhagya, seeks to ensure universal household
electrification, that is, in both rural and urban areas. Under
Saubhagya, beneficiaries will be identified using the Socio Economic and
Caste Census (SECC) 2011 data. The identified poor households will get
free electricity connections. Other households not covered under the
SECC, will be provided electricity connections at a cost of Rs 500.
This amount will be collected by the electricity distribution companies
in 10 instalments.
The total outlay of the scheme will be Rs
16,320 crore, of which the central government will provide Rs 12,320
crore. The outlay for the rural households will be Rs 14,025 crore, of
which the centre will provide Rs 10,588 crore. For urban households the
outlay will be Rs 2,295 crore of which the centre will provide Rs.
The state discoms will execute the electrification
works through contractors or other suitable agencies. Information
technology (mobile apps, web portals) will be used to organise camps in
villages to identify beneficiaries. In order to accelerate the process,
applications for electricity connections will be completed on the spot.
far the focus of electrification schemes has been on rural areas, where
typically last mile connectivity has been difficult to provide.
Saubhagya extends the ambit of electrification projects to urban areas
as well. While DDUGJY has focused on the village as the principal unit
to measure electrification, the new scheme shifts the targets to
household electrification. While the target for ensuring electricity
connection in each household will be a significant step towards ensuring
24×7 power, the question of continuous and quality supply to these
households will still rest on the ability of the discoms to provide
electricity. Further, while the scheme provides for free connections,
the ability of these households to pay for the electricity they consume
may be a concern.
Table 1: Status of rural electrification across states (as of August 2017)
* all villages in Telangana were declared electrified before the bifurcation of the state.
Sources: Ministry of Power; PRS.
“PM launches Pradhan Mantri Sahaj Bijli Har Ghar Yojana “Saubhagya””,
Press Information Bureau, Ministry of Power, September 25, 2017.
“FAQs on Pradhan Mantri Sahaj Bijli Har Ghar Yojana “Saubhagya””, Press
Information Bureau, Ministry of Power, September 27, 2017.
[iii]. Rural Electrification Policy, Ministry of Power, August 23, 2006, http://powermin.nic.in/sites/default/files/uploads/RE%20Policy_1.pdf.
[iv]. “Office memorandum: Deendayal Upadhyaya Gram Jyoti Yojana”, Ministry of Power, December 3, 2014, http://powermin.nic.in/rural_electrification/pdf/Deendayal_Upadhyaya_Gram_Jyoti_Yojana.pdf.
[v]. “41st Report: Implementation of Rajiv Gandhi Grameen Vidyutikaran Yojana”, Standing Committee on Energy, December 13, 2013, http://184.108.40.206/lsscommittee/Energy/15_Energy_41.pdf.