Evaluating Rural Electrification Impact on Demand for Electric Appliances from Rural India

Overview of the Report

GoI continues to push the rural electrification agenda: Rajiv Gandhi Grameen Vidyutikaran Yojana, Deendayal Upadhyaya Gram Jyoti Yojana and Pradhan Mantri Sahaj Bijli Har Ghar Yojana – Saubhagya, etc. Rural electrification is not a new agenda and has remained one irrespective of the political party ruling at the center. However, with the evolution of rural sector’s social and economic profile, along with build-up of power availability, generation capacity and transmission & distribution, the profile of rural electricity has seen significant positive changes over the last few years.   The rural electrification agenda goes back to 2005 when under the leadership of UPA government schemes such as Rajiv Gandhi Grameen Vidyutikaran Yojana were launched. Following this, the incumbent government, starting July 2015, launched Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) which talked about complete rural electrification by 2018 and providing 24×7 power supply to all households in collaboration with the various state departments by 2021-2022. DDUGJY also provides state governments with subsidies to provide free connections to below poverty line households.   Further, on 15th August 2015 Prime Minister declared an ambitious target to electrify 18,452 rural areas through “Saubhagya – Pradhan Mantri Sahaj Bijli Har Ghar Yojana”. This has been touted as a much needed policy to go a step further towards facilitating the last mile connectivity. Saubhagya budgets for INR 14,025 crore for rural areas covering for capex on critical equipments enroute power supply from high voltage lines to last mile consumer consumption. For very remote villages, the Saubhagya scheme provides solar power packs, battery back, with LED lights, and a direct current driven fan.    
Rural electrification has unlocked significant business avenues for electric appliances such as LED bulbs and electrical consumer durable products So far, nearly 80% of the villages in rural areas have been electrified and only over 15% rural villages still need to be electrified as the balance 5% rural areas are uninhabited. While the statistics presents an optimistic outlook, by definition, a village is being termed as “electrified” if it achieves a bare minimum of only 10% of households and public institutions being connected to the grid. However, keeping aside the definition and short-term implications, the rural electrification drive is seen as a positive step which will possibly make way for improvements in the overall demand for power in the country in the near to medium term. There are positive sentiments in the private sector with players such as Bajaj Electricals, Samsung India, Whirlpool India, Schneider Electric, etc. pinning strong hopes of a demand wave for electrical appliances and consumer durable products such as refrigerators, washing machines, etc. in the times to come.    
There is significant business potential anticipated from the rural segment The sheer potential of India’s rural segment cannot be undermined, as future improvements in reliability or quality of power will ensure a rapid adoption of electrical appliances as is being seen for states such as Maharashtra, Uttar Pradesh and Tamil Nadu.

Mergen Advisory firmly believes that rural electrification is bound to have a positive impact on the demand for power, leading to enhanced utilization of generation assets. The reliability of power supply is the catalyst for future growth of rural segment’s appetite for electrical appliances in the times to come. Based on these events, Mergen Advisory is pleased to launch its strategic market research report titled, “Evaluating Rural Electrification Impact on Demand for Electric Appliances from Rural India” which is conceived to provide a high-level quantification of opportunities in pipeline for electrical appliances from rural India.

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