Lighting Rural India: Is Feeder Segregation the Only Answer?

October 1, 2013

 A new World Bank report cautions against `One size fits all’ approach across states

New Delhi, 01 October, 2013 – Separate electricity infrastructure for rural agriculture and non-agriculture power consumers, also known as rural feeder segregation, is improving both the availability and quality of power supply in rural areas. However, a standard approach to feeder segregation for all states may not work, says a new World Bank Report.

The report Lighting Rural India: Experience of Rural Load Segregation Schemes in States says separating feeders for rural farm and non-farm consumers has led to better load management and increased power supply for rural households and small industries. However, going in for standard rural feeder or load segregation in isolation is unlikely to help improve the situation in the long term; it needs to be accompanied by robust data collection and analysis which will allow for greater transparency around agricultural consumption of electricity and better identification of subsidy targets.

The report is a result of a study conducted by the World Bank at the request of the Government of India to analyze different approaches to rural feeder segregation across states. Eight Indian states–Andhra Pradesh, Gujarat, Haryana, Punjab, Karnataka, Maharashtra, Madhya Pradesh and Rajasthan–have either completed or are implementing rural feeder segregation programs. The World Bank study analyzed the cases of Gujarat and Rajasthan–the states with the longest experience in rural feeder segregation–in detail, and also commissioned a survey of some 4,000 consumers across various categories–domestic, commercial, small industries and agriculture.

According to the survey, prior to feeder segregation, more than 80% consumers in both Gujarat and Rajasthan complained of low voltage problems, which came down to 6% post segregation; more than 80% domestic and over 50% agriculture consumers complained of frequent power outages, which reduced by less than half in both the states. Given the significant increase in the rural labor force involved in non-agriculture activities, increase in electricity supply has also led to several socio-economic benefits, including creation of jobs and improvement in the quality of life of the people in rural India.

However, the study shows that state utilities are under-utilizing the potential benefits of using the data from the segregated feeders to better target subsidies by estimating agriculture consumption accurately. Empirical evidence also suggests that it is primarily large farmers who gain from these subsidies in most states; most small and marginal farmers continue to lack access to reliable electricity. The World Bank report suggests that automated metering of agricultural consumers is essential to obtain consumer-specific consumption information and, subsequently, better direct subsidy delivery. The report sees an urgent need to use IT-enabled rural power supply systems to collect and analyze electricity input and consumption data; improve load management, thus reducing losses. It also stresses the need for constant monitoring and evaluation of the data emerging to ensure that the benefits do not get eroded.

Based on the findings of the study, the government now plans to set up a Knowledge Hub to facilitate experience sharing across states. The World Bank will provide technical assistance for this initiative. Bihar has been identified as one of the potential states where work under the Knowledge Hub will help design an appropriate rural power supply system for five or six districts.

The report says that a standard rural load segregation approach for all states may not work as states differ in terms of their objectives, geographical conditions, power infrastructure, consumer mix, rural development models etc. For example, for Haryana, loss reduction was the primary objective for feeder segregation, in Rajasthan the objective was to strengthen power supply infrastructure for farmers, and in Gujarat it was to provide 24 hours of supply to rural non-agriculture consumers. Bihar plans to set up a rural power supply infrastructure to improve agriculture production, while Uttar Pradesh is looking to strengthen the power supply systems in its tehsil towns.

“While electricity linkage is critical for growth and poverty alleviation, a `one size fits all’ approach will not work. There is need for a national guidance framework outlining the broad principles that will help make rural electrification economically viable. Each state should prepare their rural power supply improvement proposal based on their specific needs, keeping the national framework in mind,” said Ashish Khanna, lead energy specialist and one of the authors of the report. 

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