Beyond Lights: The Changing Impact of Rural Electrification on Indian Agriculture

In rural India, one of the most widespread uses of electricity for income generation is for pumping groundwater for irrigation. Groundwater irrigation leads to increased agricultural production, productivity and thereby farm incomes, albeit at the cost of depleting groundwater. India pumps more groundwater for irrigation than any other country on an annual basis, yet large parts of India remain unirrigated despite healthy groundwater levels. This paper investigates the contribution of a temporal change in India's rural electrification policy in the uneven development of groundwater irrigation. The rural electrification policy changed its focus from groundwater irrigation to domestic electrification in the 1990s, creating two broad waves of electrification. I construct a district level panel dataset using the two waves, and measure the impact of the rural electrification policy change on groundwater irrigation outcomes using a fixed effects model.

I find that the policy change resulted in over 37% loss in growth of electric pump use in districts electrified in the second wave compared to districts electrified in the first wave. Reduction in electric pump use meant that now smaller areas could be irrigated from groundwater wells. Districts electrified post policy change in the second wave, on average, witnessed nearly 53% reduction in growth of dry season irrigated area compared to districts that electrified in the first wave. The reductions in electric pump use or irrigated area cannot be explained by differences in household wealth, the need for, or the availability of groundwater resource. Even the richest farm households in the 85^th consumption percentile irrigated smaller areas on average in second wave-districts compared to the poorest in the 15^th consumption percentile in first wave-districts.

The results suggest that the Indian government must address the agricultural needs for electricity in areas where electrification took place post policy change. My results also imply an important oversight more broadly in the measurement of electricity access using household electrification. Governments across the developing world could be similarly limiting electricity-enabled income generating activities by solely targeting domestic electrification.