Energy Subsidies in India

This policy brief looks at the current market situation for off-grid solar technologies in India and the current barriers to an enabling business environment for solar.

This policy brief analyzes the current policy environment governing kerosene and off-grid solar use. It sets out a suite of detailed policy interventions that can be implemented to achieve a systemic transition from kerosene to solar for lighting in rural India.

In 2013 and 2014, India provided subsidies worth $16.9 billion/year (Rs 1.08 lakh crore/year) to produce energy from fossil fuels, mostly through support for state-owned or controlled enterprises.

Poor air quality has become a major political concern in both countries. In the 1990s, India had some success in improving air quality in Delhi through higher emissions standards for vehicles. But in the 21st century, air quality in India nationwide has continued to deteriorate, and some reports now suggest that it is discernibly worse than in China.

Common problems often require common solutions and the need for a dialogue. This is true in the case of China and India when it comes to tackling air pollution and switching to clean energy. Poor air quality has become a major political concern in both countries.

​The absence of a road initiated a journey to a remote village located in a forest in Odisha, India. The village, Sarda Gram Panchayat, is actually a cluster of five villages and is located in a dense forest near the Sambalpur District of Odisha. The remoteness of the villages has severed ties to development work—energy access, education, health facilities and other services all have hit a roadblock.

Electricity distribution utilities in India are currently unable to cover the cost of their operations from the sale of electricity. This report presents the findings of a household survey that sheds light on the awareness and views of different socioeconomic and geographical groups regarding electricity subsidies and electricity tariff reform. It concludes that there is a significant lack of awareness of the existence and size of electricity subsidies, although subsidy reform is a tough sell. At the same time, surveyed households recognize that higher power prices would have significant negative impacts on their daily activities, and some of them show willingness to pay for a more reliable power supply.