Did it increase energy consumption? A difference-in-differences evaluation of a rural electrification policy in Gujarat, India using night-time lights data

Abstract

Electricity access is an important issue and building capacity for it requires drawing relevant lessons from past policies. In this study, we evaluate the effect of the Jyotigram Yojana, or the lighted village scheme, a supply-side policy intervention during 2003–08 to increase rural electricity access in Gujarat, India. We hypothesize that policy implementation is associated with increased electricity consumption. To test this hypothesis, we exploit variation in the timing of policy implementation at the village level, and use a generalized difference-in-differences strategy for identification. Further, we use night-time luminosity measured through remote sensing as a proxy for electricity consumption, and control for weather, village fixed effect, year fixed effect, and village or administrative block specific time trend. We find that while the overall effect of the policy on night-time luminosity was not statistically significant, the effects were likely heterogeneous, with the night-time luminosity increasing in some districts after policy implementation and decreasing in others. We conclude that the policy might have had a re-distributive effect on electricity access or consumption and recommend adopting a more holistic approach – incorporating both supply-side and demand-side measures – to increase electricity access.