Journal
ENERGY POLICY
Volume 32, Issue 5, Pages 673-684Publisher
ELSEVIER SCI LTD
DOI: 10.1016/S0301-4215(02)00332-4
Keywords
cross-subsidy; electricity demand; price elasticity
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The recent reforms in India have been equated to the reduction of cross-subsidization in electricity tariffs. Examining the usefulness of cross subsidies in electricity tariffs in India, I have argued that they are prone to considerable inefficiencies and should be discontinued. I have also formally examined the viability of above-cost tariffs in the industrial sector to allow subsidized domestic and agricultural consumption. Finally, I have used data from a distribution company in the state of Uttar Pradesh, India to estimate industrial demand for electricity and have found that the policy of cross-subsidy may have indeed gone overboard in India. (C) 2003 Elsevier Ltd. All rights reserved.
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