How to Target Residential Electricity Subsidies in India: Step 2

This report analyzes the distribution of residential electricity subsidies in the Indian state of Jharkhand using a survey of over 900 households. It finds that subsidies are poorly targeted, with wealthier households receiving a disproportionate share of benefits, and proposes tariff adjustments to redirect funds toward the poor.

• In 2019, Jharkhand spent INR 984 crore (USD 140 million) on residential electricity subsidies, but approximately 60% of these benefits were captured by the richest 40% of households.
• The distribution of subsidies is skewed toward wealthier households in both rural and urban areas of Jharkhand. In rural areas, the top two quintiles received 61% of benefits while the bottom two received 25%; in urban areas, the top two quintiles received 60% and the bottom two received 25%.
• Electricity costs represent a higher income burden for the poor in Jharkhand, with the poorest 20% of households spending 12.8% of their income on electricity, compared to only 3.7% for the richest 20%.
• The report suggests that Jharkhand could generate at least USD 44 million (INR 306 crore) in fiscal savings by restricting subsidies for households consuming over 300 kWh per month and implementing incrementally decreasing subsidies for consumption blocks between 50 kWh and 200 kWh in the medium term.
• The findings in Jharkhand may reflect a broader national trend in India where residential electricity subsidies favor non-poor households, though a lack of comprehensive data remains a significant knowledge gap across the country.

APA

Aklin,, S. S. M. (2020). How to Target Residential Electricity Subsidies in India: Step 2. International Institute for Sustainable Development. https://www.iisd.org/publications/target-residential-electricity-subsidies-india-step-2

Chicago

Aklin,, Shruti Sharma,Tom Moerenhout,Michaël. How to Target Residential Electricity Subsidies in India: Step 2. International Institute for Sustainable Development, 2020. https://www.iisd.org/publications/target-residential-electricity-subsidies-india-step-2.

Wikipedia

{{cite report |last1=Aklin, |first1=Shruti Sharma,Tom Moerenhout,Michaël |title=How to Target Residential Electricity Subsidies in India: Step 2 |publisher=International Institute for Sustainable Development |date=1 October 2020 |url=https://www.iisd.org/publications/target-residential-electricity-subsidies-india-step-2 |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{aklin2020how, author = {Aklin,, Shruti Sharma,Tom Moerenhout,Michaël}, title = {{How to Target Residential Electricity Subsidies in India: Step 2}}, institution = {International Institute for Sustainable Development}, year = {2020}, month = oct, url = {https://www.iisd.org/publications/target-residential-electricity-subsidies-india-step-2}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }