Syndicate content

Energy

Out of Power? Political Capture of the Indian Electricity Sector -- Guest post by Meera Mahadevan

Development Impact Guest Blogger's picture

This is the eighteenth in this year's series of posts by PhD students on the job market.

In 2012, 700 million people in India suddenly found themselves without power for over 10 hours. At the time of the incident, political parties blamed each other for mismanagement and failing infrastructure. Such incidents reflect the extensive dysfunction in the sector, with technical problems and billing leakages that are among the worst in the world, amounting to 20% of electricity generated. The poor quality of electricity supply imposes major costs on the Indian economy; electricity shortages, for example, reduce manufacturing plant revenues by 5-10%. Why do these problems persist despite exponentially growing power generation? My job market paper shows that political corruption is one of the root causes behind unreliable electricity supply.

What is the link between political corruption and poor electricity supply? In democracies, incumbent politicians may consolidate power by favoring their voters with better access or lower prices. In India’s electricity sector, where politicians do not have direct control over electricity pricing, they may resort to illicit means in order to do this. Lower prices may actually benefit targeted consumers.  But such patronage is costly: it hurts the revenues of electricity providers, inhibiting their ability to invest in infrastructure, and lowering electricity reliability for all consumers. While subsidies and increased access benefit consumers in targeted constituencies, the resulting underinvestment by providers may lead to unreliable supply.

Estimating the often-ambiguous welfare implications of corruption is, therefore, a challenge. Especially since detecting corruption is hard: corruption is frequently concealed, complicating the task of making causal inferences and identifying mechanisms of corruption. In this research, I develop novel methods to address these challenges, and find that political corruption in the electricity sector leads to large revenue losses for electricity providers, worsening their ability to reliably provide electricity.

What’s the latest in development economics research? Microsummaries of 150+ papers from NEUDC 2018

David Evans's picture



Last weekend, the North East Universities Development Consortium held its annual conference, with more than 160 papers on a wide range of development topics and from a broad array of low- and middle-income countries. We’ve provided bite-sized, accessible (we hope!) summaries of every one of those papers that we could find on-line. Check out this collection of exciting new development economics research!

The papers are sorted by topic, but obviously many papers fit with multiple topics. There are agriculture papers in the behavioral section and trade papers in the conflict section. You should probably just read the whole post.

If you want to jump to a topic of interest, here they are: agriculture, behavioral, climate change, conflict, early child development, education, energy, finance, firms and taxes, food security, gender, health and nutrition, households, institutions and political economy, labor and migration, macroeconomics, poverty and inequality, risk management, social networks, trade, urban, and water, sanitation, and hygiene (WASH).

Evaluating energy projects – a light-bulb moment?

Arianna Legovini's picture
I recently stumbled upon a TED talk given by Alex Laskey, the founder of Opower, a company using data to affect the behavior of energy consumers. The gist of his talk is that a small behavioral change can have large effects on overall consumption. It reminded me of the debate in impact evaluation (IE) and whether IE asks central or peripheral questions. In the case of energy, very little evidence exists regarding the impact of energy on the environment and the economy.