Rural India's Economy
Lighting Up Villages: Rural Electrification
How India connected nearly all villages and households to electricity, the economic effects of power access, and the ongoing challenge of reliable supply.
Electricity transforms rural life: lights for studying, fans in the heat, phone charging, water pumps and small businesses. India made major progress in connecting its villages and households.
Village electrification
Under the Deen Dayal Upadhyaya Gram Jyoti Yojana, launched in 2014, India aimed to electrify all villages. In April 2018, the government announced that every inhabited village had been electrified. By the official definition, a village counted as electrified if public places and at least 10 percent of households were connected.
Household connections
The Saubhagya scheme, launched in 2017, aimed to connect all remaining willing households. The government reported connecting over 28 million households under the scheme, bringing household electrification close to universal by 2019.
Economic effects
Research on rural electrification in India and elsewhere has found:
- Education: children study more with electric light.
- Women’s work: some studies found electricity freed women’s time from household chores and increased their employment.
- Small businesses: shops, mills and workshops can operate longer and use machines.
- Agriculture: electric pumps support irrigation.
Effects vary; some studies found modest short-term effects on incomes, especially when supply was unreliable or households could afford only basic uses.
The reliability challenge
A connection is not the same as reliable power. Many rural areas have faced frequent power cuts and limited hours of supply, partly because electricity distribution companies lose money supplying rural customers at low tariffs. Improving reliability and the finances of distribution companies remain key challenges. Solar power, including solar pumps under the PM-KUSUM scheme, offers additional options.
Before electricity, a girl in a village studied by a kerosene lamp that was dim and smoky. After her home was connected, she could study under an electric bulb, and her mother could run a sewing machine in the evenings for extra income. Electricity changed how the family used its time.
Being connected to the grid does not guarantee power when it is needed. Hours of supply and reliability matter greatly for the economic benefits of electricity.
- India announced all inhabited villages were electrified in April 2018.
- The Saubhagya scheme connected over 28 million households, nearing universal household access.
- Electricity supports education, women's work, businesses and irrigation.
- Reliable supply and distribution company finances remain challenges.
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