The National Electricity Policy 2005 recognises electricity as a major driver of rural development and hence that of poverty alleviation. The challenge of providing electricity to all in India is much more complex than that in other countries due to our large population, vast area and immense diversity in geography, climate and social identities. The benefits that electricity access brings are justified on the grounds of social, equity and economic objectives. Thus, efforts to provide electricity access should be perceived as a social and economic investment which would catalyse development, rather than a social obligation. The Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) is electrifying households below the poverty line by extending the grid using the resources of the Indian government. The responsibility of operating the distribution system and making electricity available rests with the Distribution Companies (DISCOMs).

However, for each unit supplied to poor households, the DISCOM makes a loss of nearly 4 rupees, because the tariff is very low while the cost of power purchase is high. Therefore, adequate supply to rural households is not being achieved, and the infrastructure created under the RGGVY is under-utilised. The loss to DISCOMs can be made up by allocating low-cost power via the Ultra Mega Power Project (UMPP) approach for providing 24 x 7 minimum power supply to beneficiary households. This paper presents a proposal to achieve this objective. The proposed solution can significantly speed up efforts to meet the national commitment to provide electricity access to all households, and to ensure minimum lifeline consumption of 1 unit/household/day as a merit good. This would enable 24 x 7 power supply to around 7 crore households (28% of the population) and catalyse rural development vigorously.

This paper is continuation of Prayas Energy Group work in the area of improving electricity access to the poor. We thank the participants of the meetings held in Pune on February 18, 2012 and in Lucknow on September 28, 2012 to prepare earlier versions of this paper.