Development and the Environment: The Implications of Agricultural Electricity Subsidies in India

Badiani, R. and Jessoe, K.K. and Plant, S. (2012) Development and the Environment: The Implications of Agricultural Electricity Subsidies in India. Journal of Environment & Development, 21 (2). pp. 244-262.

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In India, the government provides agricultural electricity subsidies amounting to 85% of the average cost of supply to encourage agricultural production and economic growth, especially among the rural poor. However, these agricultural input subsidies may compromise environmental quality and have the potential to reduce agricultural output in the long run. This article provides an overview of these subsidies in India, detailing the rationale behind their introduction and their evolution over time. It then examines the benefits of the subsidies, notably a rise in agricultural productivity and an increase in rural incomes. In addition, it considers the environmental and economic costs of this policy: accelerated groundwater extraction, increased electricity usage and in turn greenhouse gas emissions, a contribution to the intermittent and low-quality electricity service characteristic of India, and potential impacts on industrial growth. The authors then broaden the lessons learned from electricity subsidies in India to other countries and contextualize these findings within the discussion on environment and development.

Item Type: Article
Uncontrolled Keywords: Agriculture, Electricity, Groundwater, India, Subsidies
Author Affiliation: The World Bank, Washington, DC, USA
Subjects: Agricultural Engineering
Divisions: General
Depositing User: Mr B Krishnamurthy
Date Deposited: 02 Sep 2016 09:45
Last Modified: 02 Sep 2016 09:45
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