Political Economy of Electricity Theft in Rural Areas: A Case Study from Rajasthan

Author(s): Sudhir Kumar Katiyar

Source: Economic and Political Weekly, Vol. 40, No. 7 (Feb. 12-18, 2005), pp. 644-648
Published by: Economic and Political Weekly
Stable URL: http://www.jstor.org/stable/4416202
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 Political Economy of Electricity
Theft in Rural Areas
A Case Study from Rajasthan
A study undertakenin a primarily agricultural electricity distributionsubdivision in
south Rajasthan reveals that distributionlosses are not only very high, but that they are
mostly commercial in nature. Illegal hooking in both the domestic and agriculture categories
is rampantand probably constitutes the largest proportion of unaccountedenergy. The
reasons for this can be traced back to factors linked to the performance of the utility and the
wider socio-political environment.It will not be possible to bring about improvementsin
the current set-up throughprimarily technological measures, instead reformpackages
mustadopt a frameworkfor interventionthat encompasses technical, commercial,
social and institutionalaspects of the problem.
SUDHIR KUMAR KATIYAR

he slow pace of reformsin the power sector remainsa
matterof concernat thehighestlevels of decision-making
as voiced recentlyby the deputychairmanof Planning
Commission.High distributionlosses are probablythe single
most importantfactorbehindslow progressof reformsin the
powersector.The extentof distributionlosses andtheirimpact
on the widereconomyis well summarisedin the reportby Core
International(CI)submittedto USAIDin September2002.Titled,
'IndiaElectricityDistributionReform- Review and Assess-
ment',the reportestimatedtransmissionand distributionlosses
touchedthefigureof Rs 26,000crorein 2001 [C12002].Itquotes
the estimatemadeby the reportof the MontekSinghAhluwalia
committeeon securitisationof SEB loans that financiallosses
of the sector will exceed Rs 45,000 crore per year duringthe
nextthreeyears.In additionto theseenormousdirectlosses, the
indirectlosses in termsof lost productivityand trade,sagging
economic activity, rapidlyshrinkingof domestic and foreign
investmentin the sector,uneconomicalandmisallocatedinvest-
mentsin captivepower,and reducedincome generationcould
be manifold.Thethreemaincategoriesof electricityconsumption
are agriculture,domestic,and industry.Amongstthese agricul-
tureis widelypresumedtobe akeycontributor tohighdistribution
losses arisingfrom low tariff and extensive theft.
Introduction
This paperpresentsresultsof a comprehensivestudy under-
takenby Prayas,an NGO, in a primarilyagriculturalelectricity
distribution
subdivision1in southRajasthan.Thestudyis thefirst
phase of a longer-terminnovativepilot projectto reducedis-
tributionlosses. The projectcame aboutas a resultof coming
togetherof a numberof stakeholdersin the areaof powersector
reform.These included InfrastructureDevelopmentFinance
Company (IDFC), Deutsche Gesellschaft fur Technische
Zusammenarbeit (GTZ)thebilateraldevelopmentsupportagency
of Germangovernment,AjmerVidyutVitranNigam(AVVNL),
and Prayas.The pilot representsa differentapproachto insti-
tutionalreformsinthepowersectorthanthelargescaleprivatisation
modelthathasbeenpushedby theWorldBank.It is in thenature
of a smallscalepilotthatexploresnewideasandconcepts.During
the first year, the studyestablishedthe existing level of losses
andthenlookedintothefactorscausingthem.Thestudyshowed
thatthe distributionlosses areveryhighandmostof themcould
be clubbedunderthe categoryof commercial2losses. Whilethe
factthatdistribution lossesarehighis well known,themagnitude
of losses being incurred(up to 80 percent and more)has come
as a revelation.
The resultsof the study show a clique of large farmersand
corruptutilityemployeeshas vestedinterestsin continuingwith
the currentset of inefficiencies.In such a scenario,it will not
be possible to bring about improvementsthroughprimarily
technologicalmeasures.Instead,reformpackageshaveto show
moreinnovationandadopta comprehensiveapproachthataims
at breakingdown this clique. Thereis an urgentneed to look
beyond old preconceivedmethodologies.Thus we have the
strangecase in Pratapgarh(and by extensionin large partsof
similarlysituatedotherareasof thestate)wherefarmersarewiling
to payfortheelectricityusedby them,butthestateis notwilling
to thinkof a methodologyto make this happen.Instead,it is
strengtheningits coercive powers to check theft.
Theresultsof thestudyhavewiderapplicabilitynotjustwithin
thepowersectorbutwithinthegeneralgamutof publicservices.
Inefficientperformanceof public services is not only a major
contributor to povertybutalso hinderseconomicgrowth.Large
scale corruptionandinefficientmanagementarecommontraits.
The resultsof the study show that the solutionsto inefficient
performanceof public serviceshave to be comprehensiveand
not merelytechnological.
Thestudypresentsthemicropictureof onelocationinRajasthan.
The findingsare applicableto similarlylocatedareasover all
of Rajasthanandotherstatesalso. Further,the studyfocuseson
distributionlosses in ruralareas.Thelossescanbe highin urban/
industrialareasalso, which the currentstudydoes not go into.

644Economic and Political Weekly February 12, 2005

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