Consumption of electricity is considered a prime indicator of development. Rise in power consumption is often used as a proxy for growth. So measuring the growth of power consumption in India?s regions or states, for which precise figures are collated by the Central Electricity Authority, is a good yardstick, or even an alternate indicator, of growth of regions or states.
Electricity consumption figures for the states in the first four years of the Eleventh Five Year Plan (2007-08 to 2010-11) show there has been a tectonic shift in power usage across the four major regions, with the north?holding three of India?s four Bimaru states of Madhya Pradesh, Rajasthan and Uttar Pradesh–overtaking the relatively more developed western region, boasting of industrialised states like Gujarat and Maharashtra. Even the southern region is fast catching up with the western region in power consumption. These trends possibly validate the increasing consensus about a growing convergence in GDP growth rates across states in the recent years.
The trends for the last four years reveal power usage grew the highest in east, where the annual average growth during 2006-11 averaged 8.1%. But a dampener is that the total power consumption in the east was just around 90 billion units in 2010-11, less than half of the other major regions. What is more striking is the disparity in consumption in the north, west and the south, the larger consuming regions, where the total annual power usage was in the range of 218 to 239 billion units.
Numbers for the three major consuming regions show the highest increase in consumption was in the north, with the growth averaging 8.1% in the last four years, which was close to double the 4.4% increase in the west, historically the largest power consuming region. In 2006-07, the end year of the Tenth Plan, power consumption in the north was 180 billion units, 9% less than in the west, but the usage level came on a par with the west in 2009-10, and then climbed up 2.6% higher than the west by 2010-11, with the total power consumption going up to 239 billion units, around 6 billion units more than the power consumed in the west.
The south is also fast catching up with the west. In 2007-08, the first year of the Eleventh Plan, power consumption in the south was 182 billion units, which was 12.7% less than the 196 billion units consumed by the north. But by 2010-11, the difference has narrowed by more than half, with the 218 billion units consumed in the south being just 6.4% lower than 239 billion units consumed in the north.
More striking than the convergence of power consumption across the three more developed regions regions is the unexpectedly large pick-up in power consumption in the middle and low income states like Andhra Pradesh and Uttar Pradesh. State-wise trends over the last four years show the highest increase in power consumption across all states was in Andhra Pradesh, a middle-income state, where the total consumption went up by 18.2 billion units, pushing up the total from 58.3 billion units in 2006-07 to 76.5 billion units in 2010-11. Maharashtra, which is the leading state in terms of both power consumption and GDP, was pushed to the second place with its additional power consumption going up by only 17.8 billion units to 107 billion units in the four years up to 2010-11.
But what is outstanding is Uttar Pradesh, which has the largest share of India?s poor, closing the gap in power consumption with the two most industrialised states of Gujarat and Tamil Nadu. Though the 48.4 billion units of power was consumed in Uttar Pradesh in 2006-07, which was around 12% lower than that of the 54.1 billion units consumed in Gujarat, the difference has narrowed down to just 3% in 2010-11. This was because the power consumption in Uttar Pradesh went up by 16.8 billion units in the last four years as against the 13.5-billion-units increase in Gujarat. This increase in Uttar Pradesh is commendable when compared with the consumption increase of just 14.6 billion units in Tamil Nadu, a middle income state with a rapidly expanding industrial base.
Another Bimaru state that has made rapid strides in power consumption is Rajasthan. Numbers at the end of the Tenth Plan show that the 31.7 billion units of power consumed by Rajasthan was lower than that of Madhya Pradesh and Punjab, where the consumption was 32.8 and 34.8 billion units, respectively. But the numbers for 2010-11 show the consumption in Rajasthan climbed up to 45.1 billion units, exceeding Madhya Pradesh, which edged up to only 38.6 billion, or even Punjab, which consumed only 41.9 million units.
One reason for the surge in power consumption, especially in the north, is the Rajiv Gandhi Grameen Vidyutikaran Yojana launched in 2005 with the specific objective of electrifying one lakh new villages and providing electricity to 2.34 crore rural BPL households. The scheme, which was later brought into the ambit of Bharat Nirman, has made substantial inroads, with R25,338 crore released by April 2011. And the major beneficiaries were states like Bihar and Uttar Pradesh, which were provided R3,575 crore and R3,273 crore, respectively.
The surge in power consumption in Bimaru states like Uttar Pradesh and Rajasthan indicates that the pick-up is broad-based, with higher demand coming not from just households, moving up the income strata, but also from the higher intensity of power usage in the productive sectors of the states? economy. This is bound to improve productivity and the prospects of sustainable growth for a prolonged period.