Gujarat’s Electricity Sector - The Fairy Tale Revival

This paper details the major steps taken by the state of Gujarat in India to bring about the transformation in the rural electricity sector and provides a learning opportunity to other sector stakeholders from India and overseas. The paper attempts to unravel how did an inefficient state electric utility transform itself into one of India’s most high-performing electricity distribution companies? What are the factors that worked and what were those conditions that enabled the government to succeed in Gujarat? Are the benefits uniformly distributed, or do urban customers reap more at the cost of rural customers, owing to the present configuration of incentives and institutional structure? The paper is based on an extensive review of available literature as well as a selection of background reading materials. The analysis reveals that it was a political determination, coupled with people’s participation, which steered the reforms and made “development” a major election issue, helping the political party, which initiated the power sector reforms in the state, to win the state elections again and again. Due to the well-timed and appropriately planned reforms and holistic measures, including feeder segregation as well as focus on water-use efficiency, the rural electricity distribution sector in Gujarat underwent a complete overhaul. It is an exciting story of political will and the government’s pledge to empower the voters.

First published on September 9, 2020 by Center for Strategic and International Studies, Washington, DC.