Role of Rural Electrification and Renewable Energy on Poverty in India A State Wise Analysis

The paper tests the hypothesis that rural electrification and increasing deployment of renewable energy in rural areas affect the agricultural income which in turn reduces the level of poverty for the sixteen selected states for the year 2011. An index of rural electrification and renewable energy is constructed using appropriate indicators by the method of Principal Component Analysis (PCA). The impact of these indices on agricultural income and later the impact of these variables on rural poverty are visualized using two regression models. Rural electrification in all states is much higher than the deployment of renewable energy sources while Rajasthan represents the state using maximum amount of renewable energy. The regression results reveal a significant positive impact of rural electrification on agricultural income and a significant negative impact of renewable energy on agricultural income for the selected year 2011. Agricultural income plays a positive role in reducing rural poverty. The study recommends that renewable energy deployment must be focused on those states that are deprived of grid connectivity in rural areas. Enhancing agriculture productivity through renewable energy deployment should be targeted along with the reforms in structure of subsidy and tariffs.

Keywords: Rural electrification, Renewable energy, Energy Transition, Rural poverty, Climate Change.