Agricultural Electricty Subsidy Reform and Power Leakage in Rajasthan

In many Indian states, a quarter or a half of the power pumped into the grid disappears, and the other part is sold at prices far below cost. These implicit and explicit electricity subsidies are meant as a lifeline to farmers, allowing the spread of irrigation using electric pumps to extract groundwater. Instead, they have locked rural India into a destructive cycle of groundwater depletion and bad power supply. Researchers will collect data on the nature of power leakages and design an alternate subsidy program, which will transfer electricity subsidies as a lump-sum amount, instead of through low, distortionary electricity prices. A planned experiment with the Rajasthan power distribution companies will measure the effects of this subsidy reform on leakages, energy consumption, and revenue.