ABS

TRA
CT
Even
after
seven
decad
es of
indep
ende
nce
nearl
y half
the
house
holds
in the

Rural

Electrification Corporation (hereinafter

called REC) was set up in the year 1969 as a
public sector company under the Companies Act
1956. The mission and vision statement of REC
states that
To facilitate availability of electricity for
accelerated growth and for enrichment of
quality of life of rural and semi-urban
population.
To act as a competitive, client-friendly and
development-oriented organisation for financing and
promoting projects covering power generation,
power conservation, power transmission and power
distribution network in the country1.

However a closer look at the mission & vision

statement of the corporation shows a basic lack
of alignment with the fundamental objective of
Rural Electrification. The idea competitive
client-friendly organisation and the focus on the
entire gamut of power generation to distribution
rather than the last mile connectivity to grid in
rural & remote areas and lack focus on rural
areas rather than including semi-urban areas
shows lack of clarity of basic purpose. No
wonder that in the five decades that REC is in
existence, the objective of hundred percent rural
electrification still remains unfulfilled, besides
the lack of quality power in already electrified
villages.

Historical perspective:
Though India gained independence from
colonial rule in 1947 in political terms, yet in
terms of the nations capacity and capability in
the areas of industry, science, technology we
continued to remain impoverished and bonded.
Under the leadership of first Prime Minister Pt.
Nehru India embarked on a path of
modernization through creation of industry and
infrastructure on a large scale. In order to
support this ambitious growth, we required huge
amounts of energy that was mostly provided for
1 http://www.recindia.nic.in/

by hydro-electric power to start with and

eventually coal based thermal power plants.
Industrial growth led to massive urbanisation
and many new townships and cities came up all
over the country. This further generated more
demand for electricity for personal consumption.
On the other hand more than two thirds of
Indians lived in rural areas and depended on
agrarian economy and village based small
artisan enterprises. Apart from base line house
hold consumption, electricity is primarily
needed to power irrigation pump sets and small
village based industries. Disproportionate focus
on industry led growth and urban areas meant
that in terms of access to basic electricity rural
India continued to be deprived till date. This is
further aggravated by the diminishing share of
agriculture in GDP and thus further
asymmetrical development between rural and
urban area. As per the latest government figures
there are about 18000 villages yet to be
electrified2 as of 2015 even after seven decades
of independence. This fact is more borne out by
the fact that today as a nation we claim to have
surplus power capacity.
This brings to the fore the objective and
mandate of REC.

Perception Vs Fact:
Technically speaking the basic definition of an
electrified village is a misnomer. From the
1980s to 1997, a village was deemed to be
electrified if any electricity was being used
within its revenue area for any purpose. After
1997, this definition was modified to state that a
village could be classified as electrified if any
electricity was being used within the inhabited
locality of the villages revenue boundary.
As one can see such a vague definition of an
electrified village without any mention of
electrified households, left a lot of scope for the
2 https://data.gov.in/catalog/progress-reportvillage-electrification

government to project high number of villages

as electrified by data jugglery. Electricity Act
2003 and 2006 Rural Electrification Policy
gave rise to a better definition of an electrified
village as follows:
A village would be classified as electrified based on
a Certificate issued by the Gram Panchayat,
certifying that
a) Basic infrastructure such as Distribution
Transformer and Distribution Lines are provided in
the inhabited locality as well as a minimum of one
Dalit Basti / hamlet where it exists; and
b) Electricity is provided to public places like
Schools, Panchayat Office, Health Centers,
Dispensaries, Community Centers etc.; and
c) The number of households electrified are at least
10% of the total number of households in the village.
(Rural Electrification Policy, 2006, p. Sec 5.1)

And yet this definition falls short of ideal as

only 10% households electrified could mean a
village as electrified.

Complex Model:
Performance of Rural Electrification Sector
The flagship program for rural electrification is
the Rajiv Gandhi Grameen Vidyutikaran Yojana
(RGGVY)3 launched in 2005. This scheme was
launched with a focus on Rural Electricity
Infrastructure and Household Electrification.
REC remains the nodal agency for
implementation of the scheme (MoP , Office
Memorandum, 2013).
While both the central and state governments
boast about 98% rural electrification
(technically), the intensive electrification
project remains far from complete. Intensive
electrification means to have 100% household
electrification, not merely 10% that is
technically defined. A 2014 study by Planning
3 RGGVY is now subsumed in Deendayal
Upadhyaya Gram Jyoti Yojana (DDUGYY)
under 2014 NDA government.

Commission carried across 7656 villages across

15 states showed that while electrified villages
were 80% ; villages with intensive
electrification were at 53% of the sample (PEO,
Planning Commission, 2014). The latest
executive summary of REC states clearly that
while nationwide 93% villages technically are
electrified, yet only 53% villages are
intensively electrified. (REC, 2016)
Whether a village is electrified or not is clearly
defined and verifiable. However there have been
many studies and newspaper reports point to
many discrepancies in government data and
ground reality. This is mainly due to multiplicity
of agencies responsible for the various schemes
and their conflicting interests and administrative
hierarchies. Says the Planning Commission
study:
Although the scheme was launched in 2005, some of
the villages have been electrified only in 2012 under
RGGVY. The reason for slow implementation is late
receipt of the letter of award (LOA) from the center
to the states and from the states to the district level.
Also the issue of deploying personnel for
identification to contractor selection to land dispute
and acquisition has also been major factors for
delay
in
electrification.
(PEO,
Planning
Commission, 2014, p. 88)

Social Inclusion:
BPL families are entitled to get free household
connections whereas APL families have to bear
the cost of installation material which works out
to around six to seven thousand rupees. (PEO,
Planning Commission, 2014, p. 86). 93% of
BPL households had electrical connection in the
sample study done by Planning commission in
2014. While electrical connections to BPL
families were free, yet monthly bill payment
remains an issue due to distance of offices where
the bill amount can be deposited, thus leading to
many cases of default and pending arrears.
Though some states have introduced franchisee
system whereby authorised persons in each

village would collect and deposit electric bills

and keep proper records.

launched by governments. An important

aspect of electrification is the ability to
charge cell phones that not only
improves communication but also
general sense of safety and connectivity
in the family and community.
There has been a general improvement
on health and sanitation after a village
gets electrified.

Positive Externalities:
It goes without saying that access to electricity
has many positive externalities that are very
prominent especially in rural areas where most
of the population makes a subsistence living.
Apart from direct impacts on agriculture and
livelihoods, electrification improves lives in
many other ways. Positive outcomes were
observed in the following as per the Planning
commission study (PEO, Planning Commission,
2014, pp. 18-21).

Impact on education in terms of

possibility of increased reading hours in
evening leading to better outcomes in
schools
Availability of electricity helped in
increasing household incomes especially
for those running in petty shops and
other small establishments.
Electrification also acts as a catalyst for
reverse migration as many unskilled and
semi-skilled persons could find some
gainful employment or start petty
enterprises themselves in and around the
villages.
Access to electricity also has a positive
effect on lives of women. The poor
household get rid of kerosene lamps
which always are potential fire hazards.
The quality of cooking improves due to
availability of light in night. Also women
themselves could engage in employment
generating works that is otherwise not
possible without electricity.
A positive impact on rural community as
a whole is the access to information via
TV. Electrified villages generally have
better awareness on current issues due to
information dissemination through TV
and this leads to better developmental
outcomes as people become more aware
of their rights and various social schemes

The other part of Story:

While government statistics generally deals in
binaries as far as provision of public goods are
concerned. Either it is provided or not provided,
household / village electrified / un-electrified
etc. Such narratives often hide the reality on
ground in terms of actual productive use of the
resource and both the quantity and quality of
available resource. In the case of electricity
there is not only a large disparity between rural
and urban societies but also between regions of
the country. Frequent interruptions, long
duration power cuts and severe voltage
fluctuations plague the electricity supply in most
rural areas. This has a negative effect on
perceived outcomes and claims often made by
various governments.
A recent study (Sept 2015) carried out by
Council on Energy, Environment and Water
(CEEW)4 on qualitative aspect of electricity
provides an insight into the large scale
asymmetry between regions of the country and
between different societal settings. The
framework takes a multi-dimensional approach
to quantify the qualitative differences.
Table 1

Tier
Dimension
Capacity

4 http://ceew.in/

Tier-0

Tier-1

No electricity

Lighting + Basic
Entertainment /
communication
(Radio/ Mobile)

Ligh
cir
ente
/ com

(~1-50W)
Reliability
(Blackout
Days)

>5 days

2-4 days

electricity boards (SEBs). Similarly off-grid

installations like solar power based systems also
require qualified technicians to maintain and
troubleshoot faults. Rural India seriously lacks
the capacity in terms of skilled manpower for
O&M of installations.

NH > 3; NL >
NH = 0-3; NL =
6
0-6
Affordability
Unaffordable
The Organizational Web:
Legality
Illegal
The fact that even after seven decades of
*NH is number of high voltage days in a month causing appliance damage; NL is number of low
independence
we have a large
backlog in terms
voltage days in a month limiting appliance usage. (Council
on Energy, Environment
and Water,
of
rural
household
electrification
is symptomatic
2015, p. xii)
Quality (*)

Based on the above framework CEEW analysed

the effectiveness of the rural electrification
policy of the government in few backwards
states of north and east India. The results are
quite startling as shown below:

Bihar
Jharkhand
M.P.
Orissa
W.B.
U.P.

Tier1
79%
73%
64%
47%
25%
71%

Tier2
18%
22%
28%
39%
40%
24%

Tier3
2%
5%
4%
12%
19%
4%

Tier4
1%
0%
4%
3%
16%
0%

Table 2

According to the CEEW report A startling

finding across six states is that, of the households
that are classified in Tier 0 (lowest level of energy
access), nearly 50 per cent are there despite having
an electricity connection. This highlights the need to
look beyond metrics such as possessing an
electricity connection to meaningfully describe the
energy access situation. Households face severe
challenges of quality, reliability and duration of
supply which then drive their classification in the
lower tiers. (Council on Energy, Environment and
Water, 2015, p. xiv)

Another critical aspect of quality of electricity

supply is the issue of Operation and
Maintenance (O&M) of the installations. Often
rural areas go days without power due some
simple faults in the system that is not attended
promptly by the linesman who are generally
permanent / contract employees of the state

of poor policy design and implementation.

Governments over the year have been launching
various
populist
schemes
for
rural
electrification. One scheme is launched before
completion of another, one scheme gets
subsumed in another. This leads to confusion on
the ground and also becomes unclear on actual
outcome in terms of verifiable data. In addition
to allocation in successive 5 year plans, there
have been additional schemes on rural
electrification floated by government of the day
for populist gains. Some of these schemes were
Minimum Needs Programme (MNP), Prime
Minister Gramodaya Yojana (PMGY), Kutir
Jyoti, Accelerated Electrification of One lakh
villages and One Crore households, Rajiv
Gandhi
Grameen
Vidyutikaran
Yojana
(RGGVY), Deendayal Upadhyaya Gram Jyoti
Yojana (DDUGJY) etc. This has been one of the
reasons for lack of integrated approach and time
bound outcomes which means that still a large
section of rural India remains without access to
basic power.
Though REC remains nodal agency for
implementation of rural electrification schemes,
yet the chain of command till the last mile
delivery and the complex web of actors involved
results in below par outcomes. The loss making
state electricity board (SEB), the contractors
who actually setup the infrastructure on the
ground, the engineers and linesman who operate
and maintain the setup etc. often do not have the
same priority and objective which often means
that the village has been wired but has no

electricity. Rural sectors are often perceived as

loss making due to low revenue collection which
makes the service unviable and yet SEBs
continue to make losses in order to provide this
public good. This vicious cycle makes the losses
grow larger year after year. Apart from multiple
agencies involved in RE projects, the funding of
each project is complex that leads to delays.
(Table-3)
Agency

Govt. of
India
Utility/ State
Contribution
Loan
(FIs/Banks)
Additional
Grant from
GoI on
achievement
of prescribed
milestones
Maximum
Grant by GoI
including
additional
grant on
achievement
of prescribed
milestones

Nature
of
Support

Grant

Quantum
support
(% of
cost)
Other
than
Special
Category
States
60%

of
project
Special
Category
States

85%

Own
Fund
Loan

10%

5%

30%

10%

Grant

50%
of
total loan
compone
nt (30%)
i.e 15%

Grant

75%

50%
of
total loan
compone
nt
(10%)
i.e. 5%
90%

Table 3
(http://www.ddugjy.gov.in/mis/portal/memo/DDUGJY_Guideline
s.pdf)

Many studies have shown that non completion

of projects are often due to technical delays
leading to stoppage of disbursal of funds.
Moreover setting up of REC as a profit making
company does call for a different financial
objective incompatible with providing public
good for poor. The last financial year (2015-16)
net profit for REC stood at 5627 crores. In spite
of this REC has run into many cases of bad
loans and mismanagement under various central
electrification schemes. According to a 2015
newspaper report "REC Limited suffered loss of Rs

153.36 crore up to December 2014 as it did not

approach the Ministry of Power to reimburse the
differential interest on soft loans it had extended
under Rajiv Gandhi Grameen Vidutikaran Yojana
(RGGVY)," said a CAG Compliance Audit
Observations report tabled in the Lok Sabha today .

(The Economic Times, 2015). Yet another report

on alleged mismanagement states, ..covering
eight years of the Plan from 2004 to 2012, was laid
before Parliament on Tuesday. In the test-checked
cases, 29 projects amounting to `548.61 crore were
awarded to ineligible contractors in Jammu &
Kashmir and Rajasthan. The CAG noted diversion of
funds to the tune of `158 crore for non-RGGVY
purposes. The CAG observed that the scheme,
launched by the Ministry of Power, had no proper
planning,
feasibility study and cost estimate,
leading to variations in the cost estimates to the
extent of `2,262 crore (The New Indian Express,
2014).

Thus REC remains more concerned with short

term project viability than long term sustenance
and
delivery
model.
Also
various
mismanagements has resulted in cost
escalations, delays leading to a large section of
society forced to live in dark after seven decades
of independence.

Straightjacketing Technology:
Application of appropriate technology is key to
long term sustenance of electrification projects
especially in remote rural areas. Whether to go
in for extension of grid, distributed generation
techniques with grid backup, standalone sources
like solar, wind, biogas etc. depend on deeper
understanding of the site from multiple technical
and social perspective. One size fits all
approach and lack of site specific need
assessment also means that many projects of
rural electrification never got off ground and in
many
cases
became
defunct
after
commissioning. Hence building capacity within
community for day to day O&M also critical in
ensuring availability of power to the households.

Global Scenario:
According to the latest World Bank figures on
number of households with access to electricity
India stands at 78.7% whereas China has 100%
electrification. The world average is at 84% and
there are more than hundred countries above
India in terms of achieving close to 100%
electrification of all households.

Conclusion:
Access to electricity not only brings qualitative
change to ones life immediately, it also has a
positive externality in terms of improving the
capability of an individual and helping to
achieve various MDG / SDG5 at a global level in
the areas of education, health and poverty
alleviation. Electricity is an important growth
engine that helps poor escape the poverty trap
towards a more dignified life and the sooner we
provide electricity to all the better for the nation.

Bibliography
Council on Energy, Environment and Water,
2015. ACCESS TO CLEAN COOKING
ENERGY ANDELECTRICITY : Survey of
States, New delhi: CEEW.
MoP , Office Memorandum, 2013. Continuation
of RGGVY in 12th and 13th Plan, s.l.: Ministry
of Power.

5 Millennium Development Goals (MDG) : In

September 2000, leaders of 189 countries gathered at the
United Nations headquarters and signed the historic
Millennium Declaration, in which they committed to
achieving a set of eight measurable goals that range from
halving extreme poverty and hunger to promoting gender
equality and reducing child mortality, by the target date of
2015.Sustainable Development Goals (SDG): In July
2014, the UN General Assembly Open Working Group
(OWG) proposed a document containing 17 goals to be
put forward for the General Assemblys approval in
September 2015. This document set the ground for the
new SDGs and the global development agenda spanning
from 2015-2030.

PEO, Planning Commission, 2014. Evaluation

Report of RGGVY, New Delhi: Planning
Commission.
REC, 2016. Executive Summary, s.l.: Rural
Electrification Corporation.
Rural Electrification Corporation Limited, n.d.
REC Mission & Vision. [Online]
Available at:
http://www.recindia.nic.in/index.php?
option=com_content&view=article&id=136&Ite
mid=541&lang=en
[Accessed 11 September 2016].
Rural Electrification Policy, 2006. Rural
Electrification Policy, New Delhi: Ministry of
Power.
The Economic Times, 2015. Rural
Electrification Corporation ran up Rs 153.36
crore loss on concessional interest: CAG, s.l.:
s.n.
The New Indian Express, 2014. CAG Unearths
Irregularities in Rural Electrification Scheme,
s.l.: s.n.