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Electrification in India: ‘Saubhagya’ scheme

October 5th, 2017 No comments

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

Under 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]

The 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.

The total 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

As 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

An 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]

Therefore, 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 connection.[v]  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

The 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

Under 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)

The 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. 1,733 crore.

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.

So 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)

Fig 1 edit

* all villages in Telangana were declared electrified before the bifurcation of the state.
Sources:  Ministry of Power; PRS.

 

[i] “PM launches Pradhan Mantri Sahaj Bijli Har Ghar Yojana “Saubhagya””, Press Information Bureau, Ministry of Power, September 25, 2017.

[ii] “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://164.100.47.134/lsscommittee/Energy/15_Energy_41.pdf.

Status of Jawaharlal Nehru National Urban Renewal Mission

December 7th, 2012 No comments

On November 28, 2012, the Comptroller and Auditor General submitted its report on the implementation of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM).  According to the report most of the projects initiated under JNNURM have not been completed.  For instance with respect to urban infrastructure projects, only 231 projects out of the 1298 sanctioned projects have been completed.  Similarly, with respect to housing projects, only 22 of the 1517 projects have been completed.  Some of the other key recommendations of the report are:

  •  Some of the reasons for the delay in completing the projects include: (i) delay in acquiring land; (ii) deficiency in preparation of projects; and (iii) non-identification of beneficiaries which increased the risk of ineligible beneficiaries getting the benefits.
  •  A total allocation of Rs 66,084 crore had been made by the Planning Commission.  However, against this total allocation, the central government had made an allocation of only Rs 37,070 out of which until March 30, 2011 only Rs 32,934 had been released.
  • There was a delay in releasing these funds to the states.  A large portion of the funds was released only in the last quarter and more particularly in March.
  • The JNNURM guidelines were deficient as they did not provide adequate guidance to the states on the method of parking the funds and utilization of interest.

The need and objectives of JNNURM

According to the 2011 census India’s urban population has increased from 286 million in 2001 to 377 million in 2011 .  With the increase in urban population, there is a requirement to improve the urban infrastructure and improve the service delivery mechanisms.  With these specific objectives in mind, the central government launched the Jawaharlal Nehru National Urban Renewal Mission 2005-2006.  The aim of the Mission is to encourage reforms and fast track planned development of identified cities (such as cities with a population of more than 1 million as per the 2001 census).  JNNURM has two main components namely : (i) Urban Infrastructure and Governance  and (ii) Urban Infrastructure Development for Small and Medium Towns.

The duration of JNNURM was from 2005-06 to 2011-12. However, as the projects have not been completed the Government has extended its duration until March 2014.

Funds for JNNURM

The funds for JNNURM are provided through the Additional Central Assistance.  This implies that the funds are provided as grants to the states directly from the centre.   In the 2012 Union Budget, the central government has allocated Rs 12,522 crore for JNNURM. This represents around 10 % of the total central assistance through the different schemes to states and union territories in 2012-13.

As on June 30 2012, 554 projects at a total cost of Rs 62,253 crore have been sanctioned under the Urban Infrastructure and Governance sub-mission of JNNURM.   The table below shows the status of the sanctioned JNNURM  projects in the different states.

State wise status of the projects under JNNURM                 (as on August 6, 2012)

Name of State Total Allocation (Rs Lakh) Number of sanctioned projects Completed Projects
Andhra Pradesh 2,11,845 52 18
Arunachal Pradesh 10,740 3 NA
Assam 27,320 2 NA
Bihar 59,241 8 NA
Chandigarh 27,087 3 NA
Chattisgarh 24,803 1 NA
Delhi 2,82,318 23 4
Goa 12,094 2 NA
Gujarat 2,57,881 72 40
Haryana 32,332 4 NA
Himachal Pradesh 13,066 5 NA
Jammu & Kashmir 48,836 5 NA
Jharkhand 94,120 5 NA
Karnataka 1,52,459 47 22
Kerala 67,476 11 NA
Madhya Pradesh 1,32,850 23 7
Maharashtra 5,50,555 80 21
Manipur 15,287 3 NA
Meghalaya 15,668 2 NA
Mizoram 14,822 4 NA
Nagaland 11,628 3 NA
Orissa 32,235 5 NA
Punjab 70,775 6 1
Puducherry 20,680 2 NA
Rajasthan 74,869 13 2
Sikkim 10,613 2 NA
Tamil Nadu 2,25,066 48 12
Tripura 14,018 2 NA
Uttar Pradesh 2,76,941 33 4
Uttarakhand 40,534 14 NA
West Bengal 3,21,840 69 15

Source: Jawaharlal Nehru National Urban Renewal Mission; PRS.

  • Gujarat at 55.55% has the highest number of completed projects, while Uttar Pradesh at 12.24% has the lowest number of completed projects.
  • Out of the larger states, Delhi and Maharashtra at 17% and 26% have a comparatively low rate of completed projects.
  • Maharashtra has the highest number of sanctioned projects, while the North Eastern states, Chattisgarh and Puducherry have the lowest number of sanctioned projects.