How to Target Residential Electricity Subsidies in India: Step 2

Using a survey of over 900 households in Jharkhand, the report finds that residential electricity subsidies are poorly targeted, with the richest 40% of households receiving approximately 60% of the benefits. It suggests that adjusting tariffs—specifically restricting subsidies for consumption over 300 kWh per month and incrementally decreasing subsidies for blocks between 50 kWh and 200 kWh—could generate at least USD 44 million in fiscal savings to support the poor or address the COVID-19 crisis.

• Residential electricity subsidies in Jharkhand are skewed toward wealthier households; in 2019, the state spent INR 984 crore (USD 140 million) on these subsidies, but approximately 60% of the benefits were captured by the richest 40% of households.
• The distribution of subsidy benefits is similarly skewed across both rural and urban areas in Jharkhand, where the top two quintiles receive 61% and 60% of benefits respectively, while the bottom two quintiles receive 25% in both settings.
• There is a disparity in the income burden of electricity costs, with the poorest 20% of households in Jharkhand spending 12.8% of their income on electricity, compared to only 3.7% for the richest 20%.
• The report proposes two specific tariff adjustments to improve equity and generate at least USD 44 million (INR 306 crore) in savings: restricting subsidies for households consuming more than 300 kWh per month and implementing incrementally decreasing subsidies for consumption blocks between 50 kWh and 200 kWh.
• The report suggests that Jharkhand's subsidy skew may reflect a larger national trend in India, though a significant knowledge gap exists due to a lack of data on subsidy targeting 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} }