[Burning Issue] Rural Electrification

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India has achieved its long-pending goal of 100% electrification of its villages. But there is still a long way to go in providing electricity to all households in the country. According to Central Electricity Authority (CEA), a village is considered electrified only if the Gram Panchayat certifies that the basic infrastructure has been provided to the inhabited area, including Dalit hamlets, and 10% of the households are electrified.

Rural Electrification in India

  • Rural electrification is considered to be the backbone of the rural economy.
  • The electricity generation capacity in India is the fifth largest in the world.
  • India is the sixth largest consumer of electricity and accounts for 3.4 percent of the global energy consumption.
  • The year 2022, has been earmarked for achieving the target of ‘24×7 Power for All’.

Rural electrification has five major facets:

  1. Setting up of Rural Electricity Infrastructure
  2. Providing connectivity to households
  3. Adequate supply of desired quality of power
  4. Supply of electricity at affordable rates
  5. Providing clean, environmentally benign and sustainable power in efficient way

When a village is called an Electrified Village?

Prior to October 1997

A Village should be classified as electrified if electricity is being used within its revenue area for any purpose whatsoever.

After October 1997

A village will be deemed to be electrified if the electricity is used in the inhabited locality, within the revenue boundary of the village for any purpose whatsoever.

As per the new definition, a village would be declared as electrified, if:

  • Basic infrastructure such as Distribution Transformer and Distribution lines are provided in the inhabited locality as well as the Dalit Basti hamlet where it exists.
  • Electricity is provided to public places like Schools, Panchayat Office, Health Centers, Dispensaries, Community centers etc.
  • The number of households electrified should be at least 10% of the total number of households in the village.

What is Rural Electrification provides for?

  1. Increase in agriculture yield.
  2. Business of Small and household enterprises shall grow resulting into new avenues for employment.
  3. Improvement in Health, Education, Banking (ATM) services.
  4. Improvement in accessibility to radio, telephone, television, internet and mobile.
  5. Betterment in social security due to availability of electricity.
  6. Accessibility of electricity to schools, panchayats, hospitals and police stations.
  7. Rural areas shall get increased opportunities for comprehensive development.

Energy source and Percentage Share in installed capacity

National Electricity Policy 2005

  • In compliance with section 3 of the Electricity Act 2003 the Central Government notified the National Electricity Policy.
  • The National Electricity Policy aims at laying guidelines for accelerated development of the power sector, providing supply of electricity to all areas and protecting interests of consumers and other stakeholders keeping in view availability of energy resources, technology available to exploit these resources, economics of generation using different resources, and energy security issues.
  • The National Electricity Policy was evolved in consultation with and considering views of the State Governments, Central Electricity Authority (CEA), Central Electricity Regulatory Commission (CERC) and other stakeholders.

The aims and objectives of the policy

  1. Access to Electricity – Available for all households in next five years
  2. Availability of Power – Demand to be fully met by 2012. Energy and peaking shortages to be overcome and adequate spinning reserve to be available.
  3. Supply of Reliable and Quality Power of specified standards in an efficient manner and at reasonable rates. Per capita availability of electricity to be increased to over 1000 units by 2012.
  4. Minimum lifeline consumption of 1 unit/household/day as a merit good by year 2012.
  5. Financial Turnaround and Commercial Viability of Electricity Sector.
  6. Protection of consumers’ interests.

National Rural Electrification Policy, 2006

  1. Goals include provision of access to electricity to all households by the year 2009, quality and reliable power supply at reasonable rates, and minimum lifeline consumption of 1 unit/household/day as a merit good by year 2012.
  2. For villages/habitations where grid connectivity would not be feasible or not cost effective, off-grid solutions based on stand-alone systems may be taken up for supply of electricity. Where these also are not feasible and if only alternative is to use isolated lighting technologies like solar photovoltaic, these may be adopted. However, such remote villages may not be designated as electrified.
  3. State government should, within 6 months, prepare and notify a rural electrification plan which should map and detail the electrification delivery mechanism. The plan may be linked to and integrated with district development plans. The plan should also be intimated to the appropriate commission.
  4. Gram panchayat shall issue the first certificate at the time of the village becoming eligible for declaration as electrified. Subsequently, the Gram Panchayat shall certify and confirm the electrified status of the village as on 31st March each year.
  5. The state government should set up a committee at the district level within 3 months, under the chairmanship of chairperson of the Zilla Panchayat and with representations from district level agencies, consumer associations, and important stakeholders with adequate representation of women.
  6. The district committee would coordinate and review the extension of electrification in the district and consumer satisfaction, etc.
  7. Panchayat Raj institutions would have a supervisory / advisory role.
  8. Institutional arrangements for backup services and technical support to systems based on non-conventional sources of energy will have to be created by the state government.

National policy for renewable energy-based micro and mini-grids

  • Introduced by Ministry of New and Renewable Energy
  • It targets setting up of at least 10,000 projects with a minimum capacity of 500MW by 2021
  • The draft policy proposes to extend energy services beyond lighting

Draft National Electricity Policy 2021

  • NEP 2021 covers multiple areas– grid operation, power markets, regulatory process, energy efficiency, optimal generation mix, transmission, distribution and many more.
  • The draft talks about the creation of Electric Vehicle charging stations, Smart meters, power markets, environment and more.
  • Ministry of Power has created a committee of experts to submit suggestions to the draft NEP 2021 within two months of the release of the draft.
  • The members of the committee include members from state governments, the Ministry of New and Renewable Energy (MNRE), NITI Aayog, and the Central Electricity Authority.

Areas of improvement:

  • It lacks a fair and coherent approach to energy transition from coal to renewable.
  • It mentions the addition of coal capacity, despite the clear writing on the wall that thermal power is becoming unviable.
  • New coal capacity should be considered only if shown essential based on rigorous modelling studies.
  • Since many coal plants are going to retire, NEP should give policy directions to generating companies to take responsibility post-retirement for waste management as well as restoration of the land, water bodies and air quality in their project areas.
  • Prevention of electricity accidents requires focus, the current NEP has provisions for efforts to build consumer awareness, but this is sadly missing in the new draft. 

What is the actual scenario of rural electrification?

  • Recently Union government announced it has achieved 100% rural electrification.
  • The definition of electrification was limited to the provision of basic infrastructure such as transformers, of electricity in public places like schools and panchayats, and electrification of at least 10% households in the village.
  • India continues to harbour energy poverty with 31 million rural households and about five million urban households still unconnected to the electricity grid.
    • A significant portion of connected rural households are yet to get adequate quantity and quality of supply.
What are the plans of the government on electrification?
  • Union government under Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS) planning to provide universal electrification.
  • By which it has an ambitious target of connecting all remaining households by the end of March 2019 and made budgetary allocations to cover the cost of electrification.
  • As part of a Centre-State joint initiative on 24×7 ‘Power for All’, State governments have already committed to ensuring round-the-clock supply to all households from April 2019.

What are the challenges for India’s electrification target?

  • Regional imbalances in electricity access is persisting in seven States namely Uttar Pradesh, Bihar, Odisha, Jharkhand, Assam, Rajasthan and Madhya Pradesh, which account for 90% of un-electrified households.
  • Coincidentally, these States are ranked poorly in social development indices and house about two-thirds of the population living below the poverty line.
  • There are a range of implementation shortcomings in universal electrification by state governments due to sluggish finance structure of the union government.
  • Most of the Indian power distribution companies (discoms) in these states are bankrupt and are unable to purchase power and provide it to consumers.
  • As a result, discoms don’t have the capacity to sign power purchase agreements (PPAs).
  • Add to this the issue of aggregate technical and commercial (AT&C) losses, heightened by the rampant problem of power theft.
  • Given the context, it is uncertain whether the goal of electrifying all ‘willing households’ by March 2019 would translate into universal access to electricity.

Related Schemes

(1) Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY)


  • To ensure electrification of all the un-electrified villages by 2017 in mission mode
  • The Scheme draws its inspiration from the similar pioneering scheme implemented by the Government of Gujarat
  • It will enable to initiate much awaited reforms in the rural areas


  • To provide electrification to all villages
  • Feeder separation to ensure sufficient power to farmers and regular supply to other consumers
  • Improvement of Sub-transmission and distribution network to improve the quality and reliability of the supply
  • Metering to reduce the losses

 (2) Pradhan Mantri Sahaj Bijli Har Ghar Yojana –“Saubhagya”

  • The Saubhagya is a scheme to ensure electrification of all willing households in the country in rural as well as urban areas.
  • It was launched in September 2017.
  • The Rural Electrification Corporation Limited (REC) is the nodal agency for the operationalization of the scheme throughout the country.


  • To provide energy access to all by last mile connectivity and electricity connections to all remaining un-electrified households in rural as well as urban areas
  • To achieve universal household electrification in the country

Beneficiaries of the project

  • The beneficiaries for free electricity connections would be identified using Socio-Economic and Caste Census (SECC) 2011 data.
  • However, un-electrified households not covered under the SECC data would also be provided electricity connections under the scheme on payment of Rs. 500 which shall be recovered by DISCOMs in 10 installments through electricity bill.
  • The solar power packs of 200 to 300 Wp with battery bank for un-electrified households located in remote and inaccessible areas, comprises Five LED lights, One DC fan, One DC power plug.
  • It also includes Repair and Maintenance (R&M) for 5 years.

Expected outcomes of the scheme

What are the issues involved?

  1. Definition: Only 1 in 10 households need to have electricity supply for the village to be officially electrified. According to 2011 census, only 55.3% of all rural households had access to electricity
  2. Quality: Around 67% of electrified villages suffer from erratic and unreliable power supply. Low voltage was widely reported.
  3. The distribution transformers catering to villages had the capacity to support the load of only 10% of the households and thus the instances of overloading and transformer breakdowns are significant.
  4. Only 7%–10% rural locations receive supply during the full evening hours (5 pm to 11 pm).
  5. In Bihar, Jharkhand and UP, more than one-third of electrified households received less than four hours of supply during the day and voltage fluctuations are also common.
  6. Metering: More than 28% electrified villages reported overcharging and ad-hoc billing. One-time connection charges also differed from village to village.
    • There are also instances of billing delays, particularly in issuing the first bill after connection. This increases the likelihood of payment defaults leading to disconnection of supply.
  7. Accountability: 52% villages face issues with contractors, repair persons and power distribution companies. Either no one turns up to address complaints or repairs are done after paying bribes or residents get repairs done at their own cost.
  8. Inaccessibility: Geographical terrain is posing a problem to grid expansion in at least 13% of all villages.
  9. NPA: Banks do not lend to mini-grid developers due to poor recovery of loans
  10. Kerosene dependence: Despite having electricity connection.
  11. Affordability: Among the most energy deprived states, while most villages and more than two-thirds of the households had electricity connections, less than 40 per cent had meaningful access to electricity.
  12. Financial Issues: High upfront cost is the major reason behind consumer disinterest in taking up and sustaining  an electricity connection.
  13. Implementation and operational roadblocks: Network investments for rural electrification have been slower than planned. Lack of timely network investments jeopardizes the provision of reliable, affordable power supply.
  14. Operational issues: In the first phase of RGGVY, rural franchisees were expected to manage distribution operations in newly electrified areas. However, most of them are not operational and DDUGJY does not envisage such franchisees.

Way forward

  • Metering and data management using ICT: Use information technology to monitor metering at feeder and distribution transformer levels to allow proper auditing of power supply.
    • Parameters such as DT failure rate, hours of supply (especially during evening hours), metering and billing information, information on consumer disconnections, new connections for entrepreneurial use, electrification of rural institutions., could be tracked and reported on the national dashboards on a monthly basis for every district or division.
    • With usage technology to monitor hours of supply, the duration of supply and interruptions can be recorded without manual intervention and tracked at a disaggregated level. This information can be used by SERCs and consumers to make DISCOMs more accountable for power supply.
  • Expansion:
    • The first step towards the target would be to provide new connections to un-electrified households and legalising existing illegal connections.
    • Improving uptake of connections by addressing financial hurdles and awareness barriers is to be taken up.
    • Financial constraint: While BPL households already receive a free connection under the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY), APL families could be given a low-cost EMI based connection.
  • Awareness: Empowering and encouraging local authorities to organise awareness campaigns and enrolment camps in habitations exhibiting limited awareness are also essential.
  • Best practice: Bihar has currently evolved a good model both awareness campaigns subsidy for APL families.
  • Supply situation: Improving the supply situation for already electrified households is to be done.
  • DISCOM reforms: DISCOMs need to better plan for their infrastructure, factoring in near-term increase in demand, strengthening maintenance, and improving supply.
  • Innovative Business: As managing rural customers, particularly in remote areas, is a challenge innovative business models need to be explored.
  • Accountability: There is a need to hold DISCOMs accountable for monitoring of supply quality and operation and maintenance efforts in rural areas in order to ensure uninterrupted supply.
  • Tariff changes:
    • In many states, small industrial and commercial consumers pay tariff rates comparable to large industrial units and commercial complexes. There needs to be innovation in tariff design to encourage home-based or small enterprises in newly electrified villages
    • Currently, supply of one unit of power costs the DISCOMs about Rs. 7 and this cost will most likely increase at a rate of more than 4% per unit in the coming years. As such costs will be unaffordable for many consumers, and with the contribution of cross-subsidies reducing, substantial subsidy support will be necessary.
  • Research:
    • Even after the targets of connections are met, there is a need for a national institution, with rural electrification as its key focus.
    • Its mandate need not be to operate the rural distribution businesses but to provide knowledge and financial support to DISCOMs for maintaining and strengthening the rural network and ensuring supply.
    • Success mainly depends on curbing DISCOM losses and ensuring consumer honesty. It is hoped that electrification would lead to improved consumer satisfaction, as electricity truly becomes an enabler of prosperity in rural India.
    • Concerted efforts to monitor supply hours for rural, remote and newly electrified households are needed.

Discuss how the rural electrification has the potential to become a driver of rural economic growth. (250 words)

Post your answers in comments below.

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