Introducing the 2016-17 federal budget to parliament, Finance Minister Arun Jaitley said on February 29 that the government would allocate more funds to bring electricity to all of the country's villages by May 2018.

New Delhi's target is to provide electrification to around 200 villages per week. The goal, however, is limited to bringing electricity to all villages, and not to provide power to all households. There is a clear distinction between the two as India's 2011 census highlighted that even in villages which had access to electricity, only 55 percent of homes used it as the primary source of lighting.

Of the estimated 300 million Indians - nearly as many people as the entire population of the United States - who do not have access to electricity, around two-thirds of them live in rural areas. In fact, government data show that over 12,000 villages in the South Asian nation are currently not connected to the power grid.

Socio-economic impact

The lack of access to electricity has been a major factor behind a myriad of socio-economic and development-related issues confronting India's rural population. The issue for instance, has had a negative impact on rural education, healthcare and agriculture, thus contributing to the widening wealth gap between the nation's urban and rural areas.

"This has affected rural education and employment, leading in turn to mass migration to urban centers, thus putting extra pressure on the urban infrastructure," said N. Sathiya Moorthy, director of the Chennai Chapter of the India-based Observer Research Foundation (ORF).

Analysts like Rajiv Biswas, Asia-Pacific Chief Economist at the analytics firm IHS Global Insight, point out that access to electricity is a major indicator of economic and human progress.

Biswas argues that electricity enables a wide range of development activities, notably an increased ability for students to study in the evenings and improve their literacy and human capital skills, as well as allowing rural families to operate cottage industries during evening hours, thereby improving incomes amongst poor rural households.

Providing access to electricity also brings environmental benefits, as rural families can use it as a source of fuel for cooking and heating, rather than rely on the burning of wood and charcoal, thus reducing deforestation and carbon emissions.

Nevertheless, India has so far failed to provide electricity to a significant proportion of its population due to a massive mismatch between the power supply and demand. And even those that are connected to the power grid are regularly forced to bear the brunt of power cuts and blackouts due to the largely outdated and overburdened electrical grid.

This is why the administration, led by Prime Minister Narendra Modi, says it has focused its efforts on expanding the nation's power generation and transmission capacities, aiming to bolster energy production by 118 gigawatts (GW) by 2017.

Expanding renewables

In addition to producing power through conventional sources such as coal, New Delhi wants to encourage renewable energy sources, with the government announcing an ambitious plan to add 100 GW of solar power production by 2022.

However, experts caution that the issues surrounding power supply to rural areas cannot be resolved by merely producing more electricity, stressing that factors such as energy pricing also play a major role.

Biswas, for instance, says that one of the key reasons behind the lack of electricity connectivity in many villages is the inability of India's rural poor to pay the energy bills, as the cost of electricity remains too high for many of them. This factor, coupled with the financial difficulties of India's power companies, has constrained the development of energy infrastructure and limited rural electricity access.

While India could overcome this problem by offering financial incentives to power utilities, the government is constrained by its already high levels of debt and fiscal deficit.

In light of this, experts recommend a greater use of renewables such as solar and wind power for villages. "Giving a high priority to renewable energy solutions and developing village microgrids - independent of a centralized grid - may offer more sustainable solutions for rapid electricity supply to rural households," said Biswas.

ORF analyst Moorthy underlines that although the government's goal of expanding electricity to all Indian villages is not unrealistic, it will face considerable challenges as success will depend on how effectively New Delhi can work with state governments on the issue.