In search of light: definitions, measurements and data

Electricity is a part and parcel of our everyday life, essential not just for the urban standard of living, but for rural livelihoods, too. Perhaps it was due to this significance that the government decided to supply power to farmers at subsidised, indeed zero, cost, which in turn led in the late 1970s to the de-metering of irrigation pumpsets (IPS). While this act was claimed to have been aimed at meeting social and political goals, it became the genesis of a myriad of issues in the Indian power sector.

The central and state governments then endeavoured to solve these issues by undertaking several reforms in the 1990s, including restructuring of utilities, privatisation and the creation of regulatory bodies. Many policies were formulated, with various targets, including provision of electricity to all and achieving universal electrification. Most recently, the central government launched the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya) to accomplish universal household electrification in rural and urban India with a budgetary support of Rs 12,320 crore during the implementation period.

While such efforts are necessary, it is important to look at the problems in the Indian power sector from a fresh perspective, taking into account underlying reasons and resolving them. Before jumping to meet the ‘target’ of the schemes, it is time the policymakers made a note of the basic definitional and measurement issues of key variables in the power sector.

First, the very definition of ‘village electrification’, issued by the Ministry of Power since 2004, is that at least 10% of the total number of households in a village should be electrified. There is a hue and cry about this definition and justifiably so. The primary questions that come to mind are: Why only 10% of households? What is special about 10%? And, most importantly, why has there been no initiative to change the definition despite sharp criticism from public as well as experts?

This issue is repeatedly emphasised because of its critical implications on policy as well as rural livelihoods. For instance, Karnataka already had “100% village electrification” by March 2018 (Central Electricity Authority, 2018). However, following strictly the definition of village electrification leads to this caveat: “We are not able to confirm that all the households in the villages are electrified (which is the actual target)”. Even though a majority of the households in villages are electrified, the degree of achievement cannot be captured because of the definition. On the other hand, since the state is declared as 100% electrified, there would probably be hardly any effort to reach the remaining un-electrified households. Why such a definition is still retained remains unanswered.

Second, the problem of accurate measurement of transmission and distribution (T&D) loss and IPS consumption, which has been discussed extensively, persists to this date. Electricity supply to end-users are metered and measurable, except for the IPS category, since they were de-metered. Thus, the remaining part of the metered consumption is the pool of the T&D loss and IPS consumption, and their share is ‘allocated’ by the utilities, without any scientific method behind it. It appears that this issue is not taken seriously enough. Such underestimation of T&D losses is probably why there is little effort to tackle them. Think of the spill-over effects.

First of all, mismeasurement of these variables distort the picture in analysing the performance of the sector, thereby leading to faulty policy implications. For example, in 2014-15, the T&D loss in Karnataka was 11.5% (CEA, 2016), which is one of the lowest among major Indian states. It also contains the ‘pilferage’ component besides the technical losses. Due to the lack of scientific measurement, we are not able to interpret that the T&D losses have indeed declined significantly in the state, since some part of the losses could have been added to the IPS consumption.

This could potentially give a wrong signal to policymakers that can lead to less investment or attention to the transmission mechanism, which is otherwise required. Such vagueness in the measurement of variables distorts the performance assessment of the sector, which can severely affect its future growth.

The inaccurate measurement of IPS consumption also has its effects. The electricity use by IPS (33% of the total in 2014-15) in Karnataka is the highest, compared to other categories. However, it cannot be interpreted as the actual consumption by this category, which makes it difficult to measure its contribution to agricultural growth.

Moreover, the poor quality and reliability of power in rural areas makes its contribution negligible. Many farmers are, in fact, willing to pay for electricity, provided they receive good quality power without interruptions and outages. However, that remains a dream yet to be achieved.

Lack of data

Third, a grey area in the Indian power sector is the lack of data and the lack of attention/awareness towards the importance of collecting and maintaining an adequate database for research and future development. Data on private sector investment at aggregate or disaggregate level is almost nil. This becomes a hurdle in investigating the progress and contribution of privatisation vis-a-vis the falling public sector share.

Although the Central Electricity Authority is responsible for collection and maintenance of database at the central level, it is necessary to establish a separate body at state level to check the actual investment level and composition, incentives, subsidies, etc., to further the research efforts in the sector, which have the potential to bring about state-specific policy directives. This would surely lead to long-term growth towards the right direction.

The concerns regarding definitions, measurements and data are often completely disregarded, or are not given due attention in policymaking circles. It is time these matters are straightened out to achieve the desired goals in the long term.

(The writer is a research scholar at Institute for Social and Economic Change, Bengaluru)